President's Emergency Plan For AIDS Relief
Partner Selection and Oversight Follow Accepted Practices but Would Benefit from Enhanced Planning and Accountability Gao ID: GAO-09-666 July 15, 2009The President's Emergency Plan for AIDS Relief (PEPFAR), first authorized in 2003 at $15 billion for 5 years, was reauthorized in 2008 at $48 billion through 2013. PEPFAR supports HIV/AIDS prevention, treatment, and care services, primarily in Africa as well as in Asia and the Caribbean. The Office of the U.S. Global AIDS Coordinator (OGAC) leads implementation of PEPFAR. The Department of Health and Human Services' Centers for Disease Control and Prevention (CDC) and the U.S. Agency for International Development (USAID) are among PEPFAR's primary implementing agencies. In this report, responding to a legislative directive, GAO examined practices used in (1) selecting organizations to implement PEPFAR activities and (2) overseeing these organizations' PEPFAR activities. GAO interviewed agency and implementing organization officials; reviewed key agency guidance; analyzed PEPFAR awards for fiscal years 2007 and 2008; and observed PEPFAR activities in Namibia, South Africa, and Zambia.
The selection of PEPFAR partner organizations to implement HIV/AIDS prevention, treatment, and care services generally follows accepted practices. GAO's review of PEPFAR guidance on annual interagency planning for program activities, including selection of implementing partners, found that the guidance calls for strategic assessments of overall program needs. GAO also found that the interagency plans for PEPFAR activities in Namibia, South Africa, and Zambia for fiscal year 2008 included such assessments, and CDC officials reported using these annual plans in planning their selection of PEPFAR implementing partners. However, the PEPFAR guidance that GAO reviewed does not call for the involvement of agency assistance and acquisition officials--officials with primary responsibility for making awards to implementing partners--although these officials possess expertise necessary to ensure that the selection process contributes to meeting program needs. Moreover, these officials were not involved in preparing the interagency PEPFAR plans for fiscal years 2008 and 2009. Further, although PEPFAR guidance on preparing the interagency plans is OGAC's key tool for coordinating the implementing agencies' partner selection processes, this guidance has not been integrated with the agencies' guidance. In making awards, CDC and USAID generally engaged in competitive selection processes, such as issuing solicitations and convening review panels, to select candidate organization proposals with the best approach for meeting program needs. In addition, CDC and USAID evaluated candidate organizations' technical, management, and financial capacities to ensure that candidates had the systems and resources needed to meet program needs. CDC and USAID have established a number of practices to oversee the activities of their PEPFAR implementing partners. For the awards that GAO reviewed, CDC and USAID required programmatic and financial reporting, reviewed implementing partners' expenditure data against their work plans, and documented site visits with checklists and reports. In addition, CDC and USAID provided technical assistance to improve implementing partners' capacities. However, several weaknesses have limited CDC's and USAID's ability to oversee partners' and subpartners' PEPFAR activities and thus ensure accountability for PEPFAR funds. First, according to OGAC data, about 29 percent of CDC and 7 percent of USAID direct-hire positions--including those with oversight responsibility--remained unfilled early in fiscal year 2009. Second, PEPFAR and agency award reporting time frames are not synchronized, exacerbating agencies' reporting burden and reducing time for oversight, including time for site visits. Third, GAO's assessments of 15 implementing partners' internal controls showed that one implementing partner and six subpartners were constrained in their ability to account for the use of PEPFAR funds, because they did not consistently carry out established policies and procedures. Fourth, CDC procedures for collecting audits and ensuring resolution of audit findings are unclear, limiting CDC's ability to help strengthen identified implementing partner weaknesses.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-09-666, President's Emergency Plan For AIDS Relief: Partner Selection and Oversight Follow Accepted Practices but Would Benefit from Enhanced Planning and Accountability
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
July 2009:
President's Emergency Plan For AIDS Relief:
Partner Selection and Oversight Follow Accepted Practices but Would
Benefit from Enhanced Planning and Accountability:
GAO-09-666:
GAO Highlights:
Highlights of GAO-09-666, a report to congressional committees.
Why GAO Did This Study:
The President‘s Emergency Plan for AIDS Relief (PEPFAR), first
authorized in 2003 at $15 billion for 5 years, was reauthorized in 2008
at $48 billion through 2013. PEPFAR supports HIV/AIDS prevention,
treatment, and care services, primarily in Africa as well as in Asia
and the Caribbean. The Office of the U.S. Global AIDS Coordinator
(OGAC) leads implementation of PEPFAR. The Department of Health and
Human Services‘ Centers for Disease Control and Prevention (CDC) and
the U.S. Agency for International Development (USAID) are among PEPFAR‘
s primary implementing agencies. In this report, responding to a
legislative directive, GAO examined practices used in (1) selecting
organizations to implement PEPFAR activities and (2) overseeing these
organizations‘ PEPFAR activities. GAO interviewed agency and
implementing organization officials; reviewed key agency guidance;
analyzed PEPFAR awards for fiscal years 2007 and 2008; and observed
PEPFAR activities in Namibia, South Africa, and Zambia.
What GAO Found:
The selection of PEPFAR partner organizations to implement HIV/AIDS
prevention, treatment, and care services generally follows accepted
practices. GAO‘s review of PEPFAR guidance on annual interagency
planning for program activities, including selection of implementing
partners, found that the guidance calls for strategic assessments of
overall program needs. GAO also found that the interagency plans for
PEPFAR activities in Namibia, South Africa, and Zambia for fiscal year
2008 included such assessments, and CDC officials reported using these
annual plans in planning their selection of PEPFAR implementing
partners. However, the PEPFAR guidance that GAO reviewed does not call
for the involvement of agency assistance and acquisition officials”
officials with primary responsibility for making awards to implementing
partners”although these officials possess expertise necessary to ensure
that the selection process contributes to meeting program needs.
Moreover, these officials were not involved in preparing the
interagency PEPFAR plans for fiscal years 2008 and 2009. Further,
although PEPFAR guidance on preparing the interagency plans is OGAC‘s
key tool for coordinating the implementing agencies‘ partner selection
processes, this guidance has not been integrated with the agencies‘
guidance. In making awards, CDC and USAID generally engaged in
competitive selection processes, such as issuing solicitations and
convening review panels, to select candidate organization proposals
with the best approach for meeting program needs. In addition, CDC and
USAID evaluated candidate organizations‘ technical, management, and
financial capacities to ensure that candidates had the systems and
resources needed to meet program needs.
CDC and USAID have established a number of practices to oversee the
activities of their PEPFAR implementing partners. For the awards that
GAO reviewed, CDC and USAID required programmatic and financial
reporting, reviewed implementing partners‘ expenditure data against
their work plans, and documented site visits with checklists and
reports. In addition, CDC and USAID provided technical assistance to
improve implementing partners‘ capacities. However, several weaknesses
have limited CDC‘s and USAID‘s ability to oversee partners‘ and
subpartners‘ PEPFAR activities and thus ensure accountability for
PEPFAR funds. First, according to OGAC data, about 29 percent of CDC
and 7 percent of USAID direct-hire positions”including those with
oversight responsibility”remained unfilled early in fiscal year 2009.
Second, PEPFAR and agency award reporting time frames are not
synchronized, exacerbating agencies‘ reporting burden and reducing time
for oversight, including time for site visits. Third, GAO‘s assessments
of 15 implementing partners‘ internal controls showed that one
implementing partner and six subpartners were constrained in their
ability to account for the use of PEPFAR funds, because they did not
consistently carry out established policies and procedures. Fourth, CDC
procedures for collecting audits and ensuring resolution of audit
findings are unclear, limiting CDC‘s ability to help strengthen
identified implementing partner weaknesses.
What GAO Recommends:
GAO recommends that the Secretary of State direct OGAC to take several
steps to improve specific processes for selecting PEPFAR implementing
partners and strengthen oversight of PEPFAR partners. The Department of
State generally acknowledged GAO‘s recommendations, noting several
areas where it has begun to take the recommended steps.
View [hyperlink, http://www.gao.gov/products/GAO-09-666] or key
components. For more information, contact David Gootnick at (202) 512-
2545 or gootnickd@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Selection of PEPFAR Implementing Partners Has Generally Followed
Accepted Practices:
CDC and USAID Have Developed Oversight Practices, but Certain Gaps
Limit Their Ability to Ensure Accountability for PEPFAR Funds:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Partners and Subpartners Selected for Review of Oversight
Practices:
Appendix III: HHS and USAID Guidance on Assistance and Acquisition
Strategies:
Appendix IV: Comments from the U.S. Department of State, Office of the
Global AIDS Coordinator:
Appendix V: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Table:
Table 1: PEPFAR Implementing Partners and Subpartners Selected for
Review of Oversight Practices:
Figures:
Figure 1: PEPFAR Focus Countries, Fiscal Years 2003-2008:
Figure 2: PEPFAR Funding for Focus Countries, Fiscal Years 2004-2008:
Figure 3: Time Line for Fiscal Year 2008 COP Preparation and CDC and
USAID Partner Selection Processes:
Figure 4: Examples of CDC, HRSA, and USAID Implementing Partner and
Subpartner Relationships:
Figure 5: Types of USAID Awards Shared between Headquarters and
Missions:
Figure 6: PEPFAR Award Increases and Extensions at CDC and USAID as of
September 30, 2008:
Figure 7: Filled and Vacant PEPFAR FTE Positions, by Agency, Fiscal
Year 2009:
Figure 8: Examples of OGAC and Agency Award Reporting Timeframes,
Fiscal Year 2008:
Abbreviations:
ADS: Automated Directives System:
ARV: antiretroviral drugs:
CDC: Centers for Disease Control and Prevention:
COP: country operational plan:
COPRS: Country Operational Plan and Reporting System:
FAR: Federal Acquisition Regulation:
FTE: full-time equivalent:
GHAI: Global HIV/AIDS Initiative:
GHCS: Global Health and Child Survival account:
HHS: Department of Health and Human Services:
HIV/AIDS: human immunodeficiency virus/acquired immune deficiency
syndrome:
HRSA: Health Resources and Services Administration:
NGO: nongovernmental organization:
NPI: New Partners Initiative:
OGAC: Office of the U.S. Global AIDS Coordinator:
OMB: Office of Management and Budget:
PEPFAR: President's Emergency Plan for AIDS Relief:
SCMS: Supply Chain Management System:
USAID: U.S. Agency for International Development:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
July 15, 2009:
Congressional Committees:
Twenty-eight years after the first cases were reported, HIV/AIDS
remains a leading global health challenge. During 2007--the most recent
year for which complete data are available--approximately 2 million
people died of HIV-related causes and an estimated 2.7 million people
were newly infected with HIV. The first 5-year phase of the President's
Emergency Plan for AIDS Relief (PEPFAR), authorized in 2003 at $15
billion, contributed significantly to the global response to the
pandemic.[Footnote 1] The strategy for PEPFAR's first phase laid out
goals for HIV/AIDS prevention, treatment, and care, including rapidly
expanding these services and ensuring their long-term sustainability.
PEPFAR's initial global targets called for preventing 7 million new HIV
infections by 2010; treating 2 million HIV-infected individuals by
2009; and caring for 10 million people affected by HIV/AIDS, including
orphans and vulnerable children, by 2009. In 2008, PEPFAR officials
reported that PEPFAR had supported antiretroviral treatment for 2.1
million men, women, and children. Congress reauthorized PEPFAR in 2008
at $48 billion, to continue and expand U.S.-funded HIV/AIDS programs
through fiscal year 2013.
The Office of the U.S. Global AIDS Coordinator (OGAC) at the Department
of State (State) is charged with coordinating and overseeing the U.S.
global response to HIV/AIDS, including programs and activities
supported by PEPFAR. The Department of Health and Human Services (HHS)
and the U.S. Agency for International Development (USAID) are among
PEPFAR's primary implementing departments and agencies (referred to in
this report as implementing agencies).[Footnote 2] HHS's Centers for
Disease Control and Prevention (CDC) and USAID obligate the majority of
PEPFAR funds; HHS's Health Resources and Services Administration (HRSA)
also administers some PEPFAR awards.[Footnote 3] CDC, HRSA, and USAID
obtain services for PEPFAR prevention, treatment, and care activities
through grants and cooperative agreements (assistance awards) and
contracts (acquisition awards)[Footnote 4] with selected implementing
partners. These partners--including, for example, U.S.-based
nongovernmental organizations (NGO) and host-country governmental
organizations and NGOs--may engage subpartners to assist in
implementing PEPFAR activities. OGAC and the implementing agencies
share responsibility for selecting and overseeing partners as well as
for achieving PEPFAR goals and assuring accountability for PEPFAR-
funded projects. Interagency teams use annual PEPFAR country
operational plans (COP)[Footnote 5] and their respective agency
processes as a framework for selecting implementing partners, and they
use OGAC's annual PEPFAR reporting process to report on their
achievement of country-level targets. At the agencies, officials with
expertise in assistance and acquisition awards (assistance and
acquisition officials) have primary responsibility for making awards to
implementing partners, approving any major changes to the awards, and
assigning oversight responsibilities for each award.
Responding to the Consolidated Appropriations Act of 2008 and the Tom
Lantos and Henry J. Hyde United States Global Leadership Against HIV/
AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008,[Footnote
6] this report evaluates key practices that the implementing agencies
have used in (1) selecting organizations to implement PEPFAR activities
and (2) overseeing these organizations' PEPFAR activities.
To address our objectives, we met with officials from OGAC, CDC, HRSA,
USAID, and implementing partner organizations. We also reviewed key
federal and agency assistance and acquisition criteria and annual OGAC
planning and reporting guidance for fiscal years 2008 and 2009. In
reviewing practices used in selecting PEPFAR implementing partners, we
analyzed award files from a sample of the 15 largest PEPFAR assistance
and acquisition awards that received fiscal year 2007 funding[Footnote
7]--1 award from HRSA;[Footnote 8] 2 awards from CDC; and 12 awards
from USAID headquarters and missions in Namibia, South Africa, and
Zambia--out of a total of 405 awards. We examined these files, which
included agency solicitations for proposals, evaluations of proposals,
award decision documents, and award agreements, to determine the
agencies' use of competitive selection and whether the agencies
evaluated applicants' technical capacity to meet PEPFAR goals and
applicants' management capacity.[Footnote 9] We also analyzed data for
all PEPFAR awards receiving fiscal year 2008 funding from CDC, USAID
headquarters, and USAID missions in the three countries we visited--a
total of 444 awards. To assess CDC, HRSA, and USAID oversight of PEPFAR
implementing partners, we analyzed 21 awards--the 15 awards described
above, 5 additional awards from CDC, and 1 additional award from USAID
South Africa--that received PEPFAR funds in fiscal year 2007. We
conducted semistructured interviews with U.S. government officials and
implementing partner representatives in these three countries and in
Washington, D.C., and Atlanta, Georgia. We also visited HIV/AIDS
activity sites and reviewed implementing partners' and subpartners'
internal controls[Footnote 10] in the three countries we visited.
We conducted this performance audit from May 2008 to June 2009 in
accordance with generally accepted government auditing standards. These
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives. Appendix I contains a more
detailed description of our scope and methodology.
Results in Brief:
CDC and USAID used accepted practices--strategic assessments,
competitive selection, and evaluation of candidate capacity--in
selecting PEPFAR implementing partners. However, a lack of involvement
of the implementing agencies' assistance and acquisition officials, as
well as a lack of clarity regarding the relation of PEPFAR guidance on
preparing the COPs to the agencies' guidance on assistance and
acquisition awards, may negatively affect the planning and execution of
partner selection.
* Strategic assessment of program needs. The COPs developed for
Namibia, South Africa, and Zambia for fiscal year 2008 reflect
strategic assessments of overall program needs, in accordance with
PEPFAR guidance on preparing the COPs. CDC officials reported using the
COPs as their strategic plan for PEPFAR partner selection, while USAID
officials reported planning for PEPFAR partner selection in the context
of individual awards rather than overall program needs. However,
although agency assistance and acquisition officials have expertise
needed to ensure that planning for partner selection is aligned with
program goals, CDC and USAID officials reported that assistance and
acquisition officials were not involved in preparing the COPs.
Moreover, PEPFAR guidance on preparing the COPs for fiscal years 2008
and 2009 did not call for the involvement of these officials.
Furthermore, although OGAC officials noted that development of the COP
serves as a first step in planning for PEPFAR partner selection, the
relation of PEPFAR guidance on preparing the COPs to agency guidance on
assistance and acquisition awards is not clear.[Footnote 11] As a
result, according to a 2007 report by CDC and USAID assistance and
acquisition officials, it is not always apparent whether PEPFAR or
agency guidance should take precedence or whether PEPFAR guidance
reflects official agency policies.
* Competitive selection. CDC and USAID issued competitive solicitations
and convened review panels for 14 of the 15 awards we reviewed that
received funding in fiscal year 2007. Additionally, CDC and USAID
generally used competitive selection processes for all PEPFAR awards
that received funding in fiscal year 2008.[Footnote 12] Use of
competitive selection can increase assurance that the process is fair
and permit the agencies to select from among the various proposals the
best approach for meeting program needs.
* Evaluation of candidate capacity. The agencies evaluated candidates'
technical, management, and financial capacity for the 15 awards we
reviewed that received funding in fiscal year 2007.[Footnote 13] Such
evaluations have been identified as essential to reducing the
government's risk when making awards, by ensuring that implementing
partners have the systems and resources necessary to meet program
needs.
CDC and USAID have established a number of practices to oversee the
activities of their PEPFAR implementing partners; however, certain
weaknesses limit the agencies' ability to ensure accountability over
PEPFAR funds. For the awards that we reviewed, CDC and USAID required
programmatic and financial reporting, reviewed implementing partners'
expenditure data against their work plans, and documented site visits
with check lists and reports. In addition, CDC and USAID provided
technical assistance to improve implementing partners' capacities.
According to OGAC, these efforts are intended to prepare local
organizations to apply for direct funding from the U.S. government and
to support local capacity development and program sustainability.
However, several weaknesses have limited CDC's and USAID's ability to
effectively oversee partners' and subpartners' PEPFAR activities.
First, according to OGAC data, about 29 percent of CDC and 7 percent of
USAID direct-hire positions--including those with oversight
responsibility--remained unfilled in fiscal year 2009. Second, PEPFAR
and agency award reporting time frames are not synchronized,
exacerbating agencies' reporting burden and reducing time for
oversight, including time for site visits. Third, our assessments of 15
implementing partners' internal controls showed that 1 partner and 6
subpartners were constrained in their ability to account for the use of
PEPFAR funds because they did not consistently carry out established
policies and procedures. Fourth, CDC procedures for collecting audits
and ensuring that audit findings are resolved are unclear, limiting
CDC's ability to help strengthen identified implementing partner
weaknesses.
We are recommending that the Secretary of State direct OGAC to take
several steps to improve PEPFAR processes for making awards and
overseeing partner activities. These steps include addressing the lack
of a clear relation between PEPFAR guidance on preparing the COP and
agency guidance on acquisition and assistance awards, developing a plan
to reduce PEPFAR reporting burden, and addressing the weaknesses in
internal controls identified in this report. State, HHS, and USAID
provided joint written comments on a draft of this report (see appendix
IV for a copy of these comments). In addition, State, in coordination
with HHS and USAID, provided technical comments, which we incorporated
as appropriate. In their written comments, the agencies generally
acknowledged our recommendations regarding PEPFAR partner selection and
oversight, noting several areas where they have begun to address our
recommendations.
Background:
In 2003, in response to the HIV/AIDS pandemic, the U.S. government
established PEPFAR through the United States Leadership Against HIV/
AIDS, Tuberculosis, and Malaria Act of 2003, targeting 15 focus
countries (see figure 1).[Footnote 14] The act streamlined the U.S.
approach to global HIV/AIDS by coordinating and deploying U.S. agencies
and resources through a single entity, OGAC, created within the
Department of State.
Figure 1: PEPFAR Focus Countries, Fiscal Years 2003-2008:
[Refer to PDF for image: 3 maps]
The maps depict the location of PEPFAR focus countries:
Africa:
Botswana;
Cote d'Ivoire;
Ethiopia;
Kenya;
Mozambique;
Namibia;
Nigeria;
Rwanda;
South Africa;
Tanzania;
Uganda;
Zambia;
Southeast Asia:
Vietnam.
Latin America:
Guyana;
Haiti.
Sources: GAO synthesis of OGAC information; Map Resources (maps).
[End of figure]
PEPFAR Funding:
Over the first 5 years of PEPFAR, funding for PEPFAR programs in the 15
focus countries, from all fund sources, increased from $751 million in
fiscal year 2004 to approximately $3.7 billion in fiscal year 2008 (see
figure 2). PEPFAR funding for the 15 countries for fiscal years 2004-
2008 totaled more than $9.9 billion.[Footnote 15]
Figure 2: PEPFAR Funding for Focus Countries, Fiscal Years 2004-2008:
[Refer to PDF for image: vertical bar graph]
Fiscal year: 2004;
Funding: $0.75 billion.
Fiscal year: 2005;
Funding: $1.23 billion.
Fiscal year: 2006;
Funding: $1.70 billion.
Fiscal year: 2007;
Funding: $2.67 billion.
Fiscal year: 2008;
Funding: $3.68 billion.
Source: GAO synthesis of OGAC data.
[End of figure]
Office of the U.S. Global AIDS Coordinator:
OGAC's functions include, among others, establishing overall policy and
program strategies, coordinating PEPFAR programs, and allocating
resources to implementing agencies, including USAID and HHS's CDC and
HRSA.[Footnote 16] CDC and USAID make awards and oversee most PEPFAR-
funded programs, which are generally implemented by partners and
subpartners. In fiscal year 2008, OGAC allocated $1.3 billion to CDC
and $2.1 billion to USAID.[Footnote 17]
OGAC executes its coordinating role in part by providing the
implementing agencies, both in the United States and in the PEPFAR
focus countries, annually updated guidance on a variety of topics, such
as preparing the COPs and reporting on program results. The 5-year
strategy for the first phase of PEPFAR characterizes in-country
planning as a core part of the implementation strategy.[Footnote 18] In
addition, OGAC convenes implementing agency officials for technical
working groups on a range of issues. Among these groups is the
Procurement and Assistance Working Group, comprising key agency
assistance and acquisition officials, which has provided guidance and
new procedures on several issues, such as the definition of local
partner and the annual program cap on the amount of funding any single
partner can receive from a given country budget. OGAC also disseminates
weekly updates to implementing agency staff in the PEPFAR focus
countries regarding topics such as deadlines and changes to official
guidance.
The annual guidance that OGAC provides on preparing the COPs addresses,
among other things, the setting of annual country-level targets,
selection of interventions and the partners that will implement them,
and estimation of the interventions' costs. According to the guidance
for fiscal year 2009, all PEPFAR implementing agencies working in a
given country should be involved in preparing the COP. The guidance
states that the key elements of each COP are planned program activities
for that country listed by funding mechanisms, indicating the source of
funding; the implementing agency; the prime partner; and the type of
award mechanism--assistance award or acquisition award.[Footnote 19]
OGAC also provides an initial planning budget to implementing agency
officials. On the basis of these budgets and PEPFAR guidance, agency
officials prepare the COPs by identifying the implementing partners
that will carry out interventions, such as administering antiretroviral
drugs or providing HIV testing,[Footnote 20] as well as the U.S.
implementing agency and the award mechanism. At implementing agency
headquarters, interagency teams made up of OGAC officials and staff
from the implementing agencies conduct technical and programmatic
reviews of the COPs in consultation with agency officials in the
countries. The review outcomes are referred to a group of senior PEPFAR
agency officials for discussion and recommendation to the Global AIDS
Coordinator for final approval.
OGAC provides a series of notifications to Congress of the activities
it plans to implement under PEPFAR in the current fiscal year. For
fiscal year 2008, OGAC submitted three congressional notifications,
beginning in November 2007. According to OGAC officials, PEPFAR funds
are usually allocated to the implementing agencies and country teams in
the third quarter of the fiscal year and are then transferred to the
implementing partners according to their annual strategies. The process
for transferring and obligating funds and the time required to complete
this process vary by agency, but all implementing agencies are
instructed to obligate their funds within 12 months of receipt.
Implementing agencies received funding for fiscal year 2008 beginning
in December 2007.
CDC and USAID Processes for Selecting and Overseeing Partners:
The 5-year strategy for the first phase of PEPFAR assigned principal
responsibility to PEPFAR implementing agencies, including CDC and
USAID, for soliciting proposals; conducting reviews; and awarding
assistance and acquisition awards through a transparent competitive
process. CDC and USAID officials in both headquarters and the field are
involved in selecting implementing partners and issuing awards as well
as overseeing implementing partners' activities. According to CDC,
assistance and acquisition officials have primary responsibility for
making awards to implementing partners, including identifying the level
of competition, approving any major changes to the awards, and
assigning oversight responsibilities to program officials for each
award.[Footnote 21] Program officials generally have technical
expertise in the award's subject matter (e.g., HIV/AIDS prevention,
antiretroviral drug procurement) and are primarily responsible for
interacting with implementing partners throughout award implementation.
[Footnote 22] At both agencies, other officials--such as technical
advisors or activity managers--may assist the program officials in
managing and overseeing award implementation.
To select award recipients, CDC, HRSA, and USAID generally publish a
solicitation for applications. Program officials then usually conduct a
review of applications, and assistance and acquisition officials make
the final award decision. According to agency officials, CDC generally
makes all awards from its headquarters in Atlanta, Georgia. USAID makes
awards from its headquarters in Washington, D.C., and from its
missions. Figure 3 shows the time line of the COP preparation process
and CDC's and USAID's partner selection processes.
Figure 3: Time Line for Fiscal Year 2008 COP Preparation and CDC and
USAID Partner Selection Processes:
[Refer to PDF for image: timeline]
OGAC:
June 2007:
* OGAC provides fiscal year 2008 initial planning budgets to focus
country teams;
Country Teams:
July-September, 2007:
* Country teams prepare COPs based on initial budget;
OGAC:
November 2007-January 2008:
* Senior PEPFAR leadership reviews COPs; U.S. Global AIDS Coordinator
approves COPs;
November 2007:
* OGAC submits first congressional notification for activities needing
early funding.
Agencies:
November 2007-September 2008 (end of fiscal year):
* Agencies receive funding from OGAC.
March 2008-July 2008: To USAID;
* USAID publishes a solicitation;
* USAID reviews application;
* USAID makes award.
March 2008-September 2008: To CDC;
* CDC publishes solicitations;
* CDD reviews applications;
* CDD makes awards.
Source: GAO analysis of OGAC data.
Note: The time line shown for CDC processes is based on data for all
new CDC awards in fiscal year 2008. USAID was able to provide data for
one new award made in fiscal year 2008; a USAID assistance and
acquisition official told us that the time line for this award was
representative of other awards made in fiscal year 2008.
[End of figure]
After an award is made, CDC and USAID assistance and acquisition
officials and program officials share responsibility for overseeing
program implementation. HHS and USAID guidance, as well as a report by
federal, state, and local organizations on grant accountability
practices,[Footnote 23] describe a number of activities for overseeing
implementing partner activities and ensuring accountability. These
include reviewing required periodic financial and programmatic reports
and plans; monitoring the financial status of awards and approving
expenditures; conducting site visits; and providing technical
assistance, either directly or through a third-party organization.
PEPFAR Implementing Partners and Subpartners:
PEPFAR funding generally is channeled through implementing agencies to
implementing partners--including many local organizations[Footnote 24]--
which in turn make awards to, and oversee the activities of, subpartner
organizations. In some cases, subpartners make awards to their own
subpartners. Implementing partners assume principal oversight
responsibility for their subpartners, which includes selecting and
issuing awards to subpartners, collecting programmatic and financial
reporting, conducting site visits, and providing technical assistance.
(See figure 4 for examples of CDC, HRSA, and USAID partner and
subpartner relationships; see appendix II for a complete list of the
PEPFAR implementing partners and subpartners we reviewed.)
Figure 4: Examples of CDC, HRSA, and USAID Implementing Partner and
Subpartner Relationships:
[Refer to PDF for image: relationship charts]
South Africa:
Top level: CDC;
Second level: South African Catholic Bishops Conference[A];
(relationship with Catholic Relief Services;
Third level: Sisters of Mercy clinic[A]; Hope for Life clinic[A]; St.
Francis[A]; St. Mary‘s[A][B]; Other subpartners.
Top level: HRSA;
Second level: Catholic Relief Services[A]; (relationship with South
African Catholic Bishops Conference[A];
Third level: The Futures Group International; Children‘s AIDS Fund;
Institute for Youth Development[A].
Zambia:
Top level: USAID;
Second level: Research Triangle Institute;
Third level: Family Health International[A];
Fourth level: AfyaMazuri; Zambia Health Education Communication
Trust[A]; Zambia Interfaith Nongovernmental Organization.
Namibia:
Top level: USAID;
Second level: Pact, Inc. [A];
Third level: Catholic AIDS Action[A]; Church Alliance for Orphans;
Evangelical Lutheran Church AIDS Program; Apostolic Faith Mission
Church; Philippi Trust Namibia; Change of Lifestyle Homes Project;
Legal AIDS Center; Rhennish Church; TKMOAMS; Chamber of Mines; Namibia
Nature Foundation; Sam Nujoma Multi Purpose Center; Walvis Bay Multi
Purpose Center.
Source: GAO analysis of OGAC, CDC, and USAID data.
[A] Implementing partners reviewed by GAO.
[B] St. Mary's is a subpartner of the South African Catholic Bishops
Council under the Catholic Relief Services award from HRSA. In
addition, in 2008 St. Mary's received support through a cooperative
agreement with CDC.
[End of figure]
Accepted Practices for Selecting Implementing Partners:
Federal laws and regulations and internal agency guidance lay out
requirements related to the selection of implementing partners to
receive assistance and acquisition awards.[Footnote 25] For assistance
awards, CDC and USAID must adhere to the general requirements of the
Federal Grant and Cooperative Agreement Act as well as to legislation
and regulations governing the operation of the individual agencies. For
acquisition awards, the Federal Acquisition Regulation (FAR) contains
specific requirements--for example, for information dissemination,
competition, and acquisition planning.[Footnote 26] Although different
legal requirements apply to assistance and acquisition awards, the
requirements have some common underlying principles, such as planning,
competitive selection, and evaluation of contractor or partner
capabilities. The 2005 GAO Framework for Assessing the Acquisition
Function at Federal Agencies[Footnote 27] and the 2005 report on grant
accountability practices[Footnote 28] highlight principles and identify
generally accepted practices for selecting implementing partners,
including planning strategically, using competitive selection, and
evaluating awards against specific criteria. According to the GAO
framework, planning strategically for selecting partners requires
engagement by all stakeholders, including procurement, finance, legal,
and other appropriate participants, to identify needs, assess
alternatives, develop cost-effective procurement approaches, and help
ensure financial accountability. Successful strategies for selecting
partners also require sufficient attention to the larger context in
which assistance and acquisitions occur; planning for partner selection
should consider agencywide needs rather than being completed on an
award-by-award basis. In addition, for assistance awards, the 2005
report on grant accountability practices names competition for
assistance awards as a way of facilitating accountability, by promoting
fairness and openness in the selection of partners. According to the
report, practices to promote competition include, among others, the
evaluation of award proposals against specific criteria and the use of
review panels to select awardees.
Selection of PEPFAR Implementing Partners Has Generally Followed
Accepted Practices:
Practices used in selecting PEPFAR implementing partners entailed some
strategic assessment of overall needs; however, PEPFAR guidance on
preparing the interagency COPs for fiscal years 2008 and 2009 does not
call for the involvement of implementing agencies' assistance and
acquisition officials' in PEPFAR planning for partner selection and is
not clearly related to the agencies' guidance on assistance and
acquisition awards. In making awards, the implementing agencies
generally engaged in competitive selection. In addition, the agencies
conducted reviews of candidates' technical, management, and financial
capacity for the 15 awards that we reviewed.
Planning for Partner Selection Has Included Strategic Assessments, but
PEPFAR Guidance Has Had Some Gaps:
Planning for PEPFAR partner selection, through the interagency COPs and
the implementing agencies' individual planning, has generally included
assessment of overall program needs. However, the process has lacked
the involvement of agency assistance and acquisition officials, and
PEPFAR guidance on preparing the COPs for fiscal years 2008 and 2009
does not call for these officials' involvement. Moreover, although
developing the COPs is the first step in planning for partner selection
among the implementing agencies, the relation of PEPFAR guidance on
preparing the COPs to agency guidance on acquisition and assistance
awards has been unclear, leading to confusion over which guidance
should take precedence.
Partner Selection Planning Has Generally Involved Strategic Assessment
of Overall Program Needs:
The COPs for the three countries we visited include strategic
assessments of overall program needs, as called for in PEPFAR guidance,
as the first step in planning for partner selection. PEPFAR guidance on
preparing the COP directs officials to include a program planning
table, divided into 15 program areas.[Footnote 29] The table is to
include a narrative that provides the context for each program area in
the country and describes the broader strategic U.S. government vision.
Our analysis found that the COPs for the three countries we visited--
Namibia, South Africa, and Zambia--include this program planning table.
For example, the COP for Namibia for fiscal year 2008 describes
prevention of mother-to-child transmission of HIV/AIDS as a core
component of prevention services and then details the activities that
each partner plans to conduct within that program area.
Agencies' approaches to planning for partner selection for PEPFAR
activities vary. CDC assistance and acquisition officials and program
officials told us that they used the COPs as their strategic plan for
PEPFAR partner selection. USAID assistance and acquisition officials
told us that planning for PEPFAR partner selection in headquarters and
the missions is undertaken for individual awards, including discussion
of actions that might be needed for the coming year, and that missions'
annual assistance and acquisition plans also lay out anticipated
actions for individual awards. (See appendix III for a table
summarizing HHS and USAID guidance on strategic planning for assistance
and acquisition.)
PEPFAR Guidance Has Not Called for Participation of Agency Assistance
and Acquisition Officials:
PEPFAR guidance on preparing the COPs for fiscal years 2008 and 2009
does not discuss the involvement of assistance and acquisition
officials in the planning process. Moreover, agency assistance and
acquisition officials generally have not been involved in preparing the
interagency COPs, although these officials possess expertise needed to
ensure that planning decisions affecting the partner selection process
contribute to meeting program needs. Our previous work has shown that
planning strategically for selecting partners requires engagement by
all stakeholders, including assistance and acquisition
officials.[Footnote 30]
A 2007 report by CDC and USAID assistance and acquisition officials
stated that, except at some USAID missions, assistance and acquisition
officials generally did not participate in the process of preparing
COPs from the beginning of PEPFAR through fiscal year 2007.[Footnote
31] Although the Procurement and Assistance Working Group, which is
coordinated through OGAC, reported that OGAC committed to disseminating
PEPFAR guidance about including assistance and acquisition officials
and other nonprogram officials in the COP planning process by summer
2008, OGAC had not yet drafted this guidance as of March 2009. An OGAC
official told us that she had verbally encouraged assistance and
acquisition officials to participate. However, CDC and USAID officials
told us that their agencies' assistance and acquisition officials were
not involved in preparing COPs for fiscal years 2008 and 2009. As a
result, assistance and acquisition officials were unable to contribute
their expertise to planning decisions--for example, regarding the
appropriate award mechanism and level of competition--and thus help
ensure that the partner selection process contributes to meeting
program needs.
PEPFAR Guidance Has Not Been Clearly Related to Agency Guidance on
Partner Selection:
PEPFAR guidance on preparing the COPs for fiscal years 2008 and 2009 is
not clearly related to agency guidance on acquisition and assistance
awards, although OGAC characterizes preparation of the interagency COPs
as the first step in coordinating partner selection processes among the
implementing agencies. The 2007 report by CDC and USAID assistance and
acquisition officials notes that PEPFAR guidance regarding partner
selection is often not built into USAID guidance. The report also notes
that it was not clear whether PEPFAR or USAID guidance should take
precedence in matters of partner selection.
As a result of the lack of clarity about the relation of PEPFAR
guidance to agency guidance, according to the 2007 report, assistance
and acquisition officials have at times been uncertain whether PEPFAR
guidance reflects official agency policy. Agency officials also
suggested that the lack of clarity about the relation of PEPFAR and
agency guidance may have led to duplication and confusion in
implementing PEPFAR processes for partner selection. For instance,
although the COP indicates whether an award should take the form of an
assistance or acquisition award, a USAID assistance and acquisition
official told us that this indication had no bearing on USAID's
decisions about which award mechanism to pursue, because USAID
decisions on assistance and acquisition must follow USAID guidance. In
another example, program officials at CDC and USAID in South Africa
told us that they jointly issued a solicitation for new PEPFAR awards
and collaborated in the proposal review. Although OGAC officials cited
this joint solicitation and review as a model, HHS assistance and
acquisition officials discouraged CDC's participation in the process,
owing to concerns about whether the joint solicitation process adhered
sufficiently to HHS guidance on selecting partners.[Footnote 32]
Agencies Generally Used Competitive Selection Processes for PEPFAR
Awards:
The implementing agencies generally engaged in practices to ensure
competitive selection. Our previous work on grant
accountability[Footnote 33] identified competition as a means that
agencies can use to increase assurance that implementing partners have
the systems and resources to efficiently and effectively use funds to
meet assistance award goals; in the area of acquisition awards, the FAR
contains detailed requirements concerning competition.[Footnote 34] In
addition, OGAC officials told us that competitive selection was an
important aspect of PEPFAR.
Our review of award documentation for the 15 awards that received
funding in fiscal year 2007 found that CDC and USAID used competitive
selection processes for most of the awards.[Footnote 35] For 9 of the
10 assistance awards and for the 5 acquisition awards, the agencies
issued solicitations; convened review panels, consisting of program
officials; and issued the awards in accordance with the review panels'
nonbinding evaluations.[Footnote 36]
Our analysis of data on CDC and USAID awards that received funding in
fiscal year 2008 also showed general use of competitive selection
processes.
* CDC awards. CDC generally used competitive selection processes for
the 327 awards that received funding in fiscal year 2008.[Footnote 37]
About one-quarter of these awards were made under fully competitive
procedures. For about half of the awards that received funding in
fiscal year 2008, CDC characterized its solicitations as limited
competition. For instance, one solicitation limited eligible applicants
to those with experience in implementing antiretroviral (ARV) treatment
and operating in some of the PEPFAR focus countries. Another limited-
competition solicitation contained no language limiting eligibility;
however, CDC assistance and acquisition officials told us that because
the solicitation did not include standard language used for fully
competitive solicitations,[Footnote 38] they considered it to be
limited competition. The remaining quarter of awards that received
funding in fiscal year 2008 were awarded under solicitations that
bypassed competition by identifying only one eligible applicant.
[Footnote 39] CDC program officials noted and our analysis showed that
many of these cooperative agreements were awarded to governmental
organizations such as ministries of health.
* USAID awards. USAID generally used competitive procedures for awards
that received funding in fiscal year 2008. USAID Washington used
competitive selection procedures to make 51 of the 54 awards that
received PEPFAR funding in fiscal year 2008; similarly, USAID missions
in the three countries we visited used competitive selection procedures
for 48 of 54 awards[Footnote 40] that received PEPFAR funding in fiscal
year 2008.[Footnote 41] In addition, USAID used awards shared between
headquarters and missions to help its missions meet the goal of
competitive selection while reducing the burden on mission staff to run
their own competitions. In these cases, USAID runs competitions for
awards in Washington and then allows missions to provide funds to those
awards, either by providing funding (known as field support) to a
central award, issuing an associate award in the mission under a leader
award,[Footnote 42] or issuing a task order in the mission under a
headquarters acquisition award (see figure 5).[Footnote 43] For
example, the USAID mission in Namibia, which does not have on-site
assistance and acquisition officials,[Footnote 44] generally relies on
field support and associate awards rather than competing its own
awards. In fiscal year 2008, 27 of 63 awards in the USAID missions in
the three countries we visited--Namibia, South Africa, and Zambia--used
the field support mechanism. Nine of the remaining 36 awards were
leader with associate awards, and the remaining 27 were awards that
were competed and funded by the missions. (See figure 5 for an
illustration of the types of USAID awards shared between headquarters
and missions.)
Figure 5: Types of USAID Awards Shared between Headquarters and
Missions:
[Refer to PDF for image: illustrated table]
(1) Central award: Washington:
USAID Washington generally issues solicitation and award. Program
official is based in Washington.
With field support: Field Mission:
USAID mission funds are used to buy into the central award. Mission
staff support award oversight, but primary responsibility rests with
officials in Washington.
(2) Leader award: Washington:
USAID Washington generally issues solicitation and leader award. Leader
award program official is based in Washington.
With associate award: Field Mission:
USAID mission issues associate award under leader award, using mission
funds. Associate award program official is based in USAID mission.
(3) Centrally issued acquisition award: Washington:
USAID Washington issues solicitation and award. Program official is
based in Washington.
Mission-issued task order: Field MIssion:
USAID mission issues task order under centrally issued acquisition
award. Program official is based in mission.
Sources: GAO analysis of USAID data; Nova Development (clip art).
Notes: Central awards may be acquisition or assistance awards. Leader
with associate awards are assistance awards.
[End of figure]
Although we found that the agencies generally used competitive
selection processes for awards that received funding in fiscal year
2008, we also found that USAID awards were frequently extended beyond
their original time frame or increased over the amount originally
planned.[Footnote 45] For instance, of 54 awards that received funding
in fiscal year 2008 from USAID Washington, more than half received an
extension, an increase in award amount, or both (see figure 6).
[Footnote 46] USAID officials told us that OGAC was responsible for
requesting extensions of most of the awards that received extensions.
[Footnote 47]
Figure 6: PEPFAR Award Increases and Extensions at CDC and USAID as of
September 30, 2008:
[Refer to PDF for image: stacked vertical bar graph]
USAID Washington:
Awards without increases or extensions: 25;
Increases and extensions: 4;
Extensions only: 16;
Increases only: 9;
Total awards: 54.
USAID missions in the three countries we missed:
Awards without increases or extensions: 39;
Increases and extensions: 2;
Extensions only: 4;
Increases only: 18;
Total awards: 63.
CDC:
Awards without increases or extensions: 230;
Increases and extensions: 10;
Extensions only: 9;
Increases only: 83;
Total awards: 321.
Source: GAO analysis of CDC and USAID data.
Notes:
The awards that were extended or increased represent, for PEPFAR awards
that received funding in fiscal year 2008, about 60 percent of all
USAID Washington funds obligated; about 40 percent of GHAI/GHCS funds
obligated in the USAID missions in Namibia, South Africa, and Zambia;
and about 70 percent of GHAI/GHCS funds obligated by CDC for assistance
awards. Acquisition awards represent a much smaller portion of
obligations of PEPFAR funds ($18 million) than assistance awards at CDC
($2.5 billion).
The data that CDC provided on increases in assistance award amounts do
not distinguish between (1) supplemental funding that increases awards
beyond the amount that was originally planned and (2) supplemental
funding that does not increase awards beyond the amount that was
originally planned. CDC funds its awards on an annual basis. If CDC is
not able to provide full funding of the planned award amount at the
beginning of the year--for instance, owing to delays in receiving
appropriations from Congress--it provides additional funding throughout
the year as funds become available. The category of award increases
represents both types of supplemental funds.
The data that USAID provided on award extensions do not distinguish
between (1) administrative extensions granted by the program officials
and (2) extensions that require a noncompetitive justification approved
by the acquisition and assistance officials. For example, according to
OGAC, program officials at USAID can extend task orders by 60 days with
written notice to the acquisition official, and assistance awards can
be extended for up to 12 months with notice to the assistance official.
Our analysis excludes 10 awards from the USAID mission in South Africa
because of errors found during our data verification process.
[End of figure]
Agencies Evaluated Award Candidates' Technical, Management, and
Financial Accountability Capacity:
Our review of award documentation for the 10 assistance awards and 5
acquisition awards that received funding in fiscal year 2007 showed
that in evaluating award proposals, the agencies generally considered
candidates' technical capacity to achieve PEPFAR goals and candidates'
management and financial capacities. The 2005 report on grant
accountability characterizes preaward reviews of assistance awards,
including management and financial reviews, as essential to reducing
the government's risk when making assistance awards.[Footnote 48] For
acquisition awards, the FAR contains detailed requirements concerning
source selection procedures, including a focus on offeror capabilities.
[Footnote 49]
* Technical capacity. CDC and USAID program officials evaluated
candidates' technical capacity to achieve key PEPFAR goals of rapid
expansion and sustainability. For the 14 awards we reviewed for which a
solicitation was issued,[Footnote 50] 10 solicitations[Footnote 51]
referenced the PEPFAR goal of long-term sustainability and 8
solicitations[Footnote 52] referenced the goal of rapid expansion as
criteria for evaluation. The agency program officials evaluated 10 of
the proposals[Footnote 53] against the criterion of capacity to meet
the goal of long-term sustainability and 6 of the proposals[Footnote
54] against the criterion of capacity to meet the goal of rapid
expansion.
* Management and financial capacity. For 9 of 10 assistance awards and
all 5 acquisition awards that we reviewed, CDC and USAID program
officials considered candidates' capacity to manage proposed projects,
evaluating factors such as institutional capacity, management plan or
experience, and key personnel for management. In addition, we found
that USAID assistance and acquisition officials evaluated, among other
things, candidates' financial resources and ability to comply with
award conditions.[Footnote 55] Of the 12 USAID awards that we reviewed,
10 awards[Footnote 56] were made to organizations with previous USAID
awards; we found that USAID assistance and acquisition officials
reviewed these candidates' past performance and determined that they
were capable of meeting USAID requirements. For the remaining two
awards,[Footnote 57] because the candidates were new to USAID at the
time the awards were made, USAID assistance and acquisition officials
reviewed annual audits and conducted one preaward audit for an
assistance award. In the case of the preaward audit for the assistance
award, the responsible assistance official found that the candidate did
not have sufficient procurement policies and procedures in place and,
in response, placed conditions on the award requiring resolution of the
weaknesses. As of April 2009, CDC assistance and acquisition officials
told us CDC has not conducted preaward financial reviews or audits of
PEPFAR partners.[Footnote 58]
CDC and USAID Have Developed Oversight Practices, but Certain Gaps
Limit Their Ability to Ensure Accountability for PEPFAR Funds:
CDC and USAID have developed and implemented practices to provide
accountability over PEPFAR awards, such as reviewing programmatic
reports and financial data and providing technical assistance to
partners. However, unfilled staff positions, unsynchronized reporting
time frames, and weaknesses in implementing partners' internal
controls, as well as unclear procedures at CDC for sharing and
resolving audit findings, limit agencies' abilities to ensure
accountability for PEPFAR funds.
CDC and USAID Have Established Practices for Overseeing PEPFAR
Partners' Activities:
Based on our review of 21 awards,[Footnote 59] we found that CDC and
USAID put in place a number of practices to oversee PEPFAR partners'
activities.[Footnote 60] First, CDC and USAID have monitored
implementing partners' activities through required reports and requests
for implementing partner expenditure data[Footnote 61] as well as
checklists for oversight visits.
* Required reports. For the 15 awards funded in fiscal year 2007 for
which we reviewed documentation, CDC, HRSA, and USAID, in their award
agreements, required their implementing partners to submit programmatic
reports.[Footnote 62] For 14 of these awards, the agencies also
required financial reporting. For one of the awards (an acquisition
award), the agency required the implementing partner to submit vouchers
for goods and services provided. CDC and USAID officials in Namibia,
South Africa, and Zambia told us that they use these reports to oversee
implementing partners' activities.
* Expenditure data and work plans. CDC and USAID officials in the three
countries we visited told us they review expenditure data provided by
implementing partners to ensure that they are carrying out project
activities in accordance with partners' work plans.
* Site visit checklists and reports. USAID officials in Namibia, South
Africa, and Zambia told us they use checklists when conducting site
visits and meeting with implementing partner representatives; the
checklists also are used to document the visits. These checklists
included, for example, assessments of implement partner performance and
data quality, checks to ensure property and materials were being used
and stored properly, and monitoring of partners' management of PEPFAR
funds. Although CDC officials in these three countries told us they did
not use site visit checklists, they said they document their site
visits and follow up on any issues raised during these meetings.
Second, CDC and USAID have allocated resources through direct provision
of technical assistance, umbrella grants managers, awards with
subawards, and third-party technical assistance providers, to improve
local implementing partners' programmatic and management capacities.
* Direct assistance. CDC and USAID officials in the three countries we
visited told us they work closely[Footnote 63] with implementing
partners, including private and public organizations based in PEPFAR
countries, to improve these partners' programmatic and management
capacities to provide HIV/AIDS prevention, treatment and care services.
[Footnote 64] According to CDC officials, CDC employees--whose offices
may be in or near government agency facilities--work with host country
officials on PEPFAR-funded program activities and, as such, provide on-
the-job training and technical assistance to local health sector
personnel.
* Umbrella grants managers. OGAC's 2008 and 2009 COP guidance notes
that PEPFAR implementing agencies have used umbrella grants managers to
provide expertise in accounting, management, and auditing to
organizations based in PEPFAR countries. In South Africa, for example,
CDC and USAID select the subpartners to be managed by the umbrella
grants manager, approve the grants manager's oversight plans and tools,
and occasionally accompany the grants manager on subpartner site
visits. USAID officials in South Africa told us they consider umbrella
grants managers to be a best practice for program implementation in
South Africa.
* Subawards. Some HHS and USAID implementing partners, although not
considered umbrella grants managers, also make subawards to local
partners and, in doing so, assume primary responsibility for subpartner
oversight, including technical assistance and training.[Footnote 65] Of
the 21 HHS and USAID partners in our sample of awards reviewed for
oversight practices, 17 of these engaged one or more subpartners to
implement PEPFAR programs. For example, in Zambia, two USAID
implementing partners we reviewed oversee local private and public
organizations' implementation of prevention, treatment, and care
activities and provide technical assistance to these indigenous
organizations. According to CDC and USAID officials in South Africa,
CDC tends to be more involved in subpartners' day-to-day implementation
of PEPFAR activities, especially in cases where CDC staff work on site
with implementing partner and subpartner staff.
* Third-party technical assistance providers. CDC and USAID have made
awards to third-party organizations to provide technical assistance to
existing partners. For example, USAID Zambia recently used PEPFAR funds
to award a cooperative agreement to a U.S.-based organization to
provide technical assistance and training to local implementing
partners in Zambia. Likewise, USAID and CDC have made awards to several
U.S.-based organizations for the provision of technical assistance to
NPI implementing partners.
Although the results of technical assistance provided by CDC and USAID
employees, umbrella grants managers, prime implementing partners, or
third-party organizations remain to be seen, according to OGAC, these
efforts aim to prepare local organizations to apply for direct funding
from the U.S. government and to support local capacity development and
program sustainability.
Several Factors Limit Agencies' Ability to Oversee Network of Partners
and Subpartners:
Although CDC and USAID have put in place award accountability
practices, a number of factors limit their ability to oversee a complex
network of implementing partners and subpartners.
CDC and USAID Positions Remain Unfilled:
A number of CDC and USAID positions, including positions for program
officials and assistance and acquisition officials with responsibility
for overseeing PEPFAR activities, remained unfilled in fiscal year
2008.[Footnote 66]According to OGAC, planned staffing levels increased
from 2004 to 2008; as previously noted, funding for HIV/AIDS programs
in the PEPFAR focus countries also increased significantly during this
period. However, according to OGAC data as of November 2008, about 29
and 7 percent, respectively, of CDC and USAID direct-hire positions
[Footnote 67] remained unfilled in fiscal year 2009, and about 27 and
25 percent, respectively, of other CDC and USAID positions[Footnote 68]
remained unfilled (see figure 7).
Figure 7: Filled and Vacant PEPFAR FTE Positions, by Agency, Fiscal
Year 2009:
[Refer to PDF for image: horizontal bar graph]
Agency: CDC direct hire;
Filled: 76 (71%);
Vacant: 32 (29%);
Total: 108.
Agency: CDC all other staff;
Filled: 411 (73%);
Vacant: 149 (27%);
Total: 560.
Agency: USAID direct hire;
Filled: 51 (93%);
Vacant: 4 (7%);
Total: 55.
Agency: USAID all other staff;
Filled: 220 (75%);
Vacant: 75 (25%);
Total: 295.
Source: GAO analysis of OGAC data.
[End of figure]
Several reasons have been cited for the persistence of unfilled CDC and
USAID positions. CDC and USAID officials in South Africa and Zambia
told us that challenges associated with PEPFAR work[Footnote 69] can
make it difficult to recruit staff. USAID officials in Namibia told us
that positions related to PEPFAR oversight can be difficult to fill
because of a shortage of qualified candidates from local universities.
In addition, a December 2007 PEPFAR award official conference report,
noting a shortage of CDC and USAID assistance and acquisition officials
in agency headquarters and field missions, cited a limited human
resource pool, hiring competition across agencies and NGOs, lengthy
recruitment periods, and office space limitations as barriers to
increasing staff levels.[Footnote 70] The report recommended a needs
assessment and development of staffing plans to address these
shortages.[Footnote 71]
Reporting Requirements Exacerbate Agencies' Reporting Burden, Reducing
Time for Oversight Visits:
CDC and USAID award reporting timeframes are not synchronized with
reporting time frames required by PEPFAR guidance, obliging CDC and
USAID to request additional information from their implementing
partners and reducing time available for oversight activities. PEPFAR
guidance on reporting requires PEPFAR country teams to submit semi-
annual and annual data on key PEPFAR indicators, as well as on
financial obligations made to CDC and USAID implementing partners;
these reports follow the federal fiscal year.[Footnote 72] On the other
hand, CDC and USAID award agreements require implementing partners to
submit periodic programmatic and financial reports according to the
project period, which varies according to the date the award is made
(see figure 8).[Footnote 73] A report by an OGAC task force on PEPFAR
planning and reporting burden notes that reporting requirements also
vary by content and use of formats.[Footnote 74]
Figure 8: Examples of OGAC and Agency Award Reporting Timeframes,
Fiscal Year 2008:
[Refer to PDF for image: illustration]
USAID award: Partnership for Supply Chain Management;
Financial reporting time frame: quarterly financial status report;
January 2007 through December 2008;
Programmatic reporting time frame: quarterly performance report;
January 2007 through December 2008.
USAID award: Elizabeth Glaser Pediatrics AIDS Foundation;
Financial reporting time frame: quarterly financial status report;
January 2007 through December 2008;
Programmatic reporting time frame: Semi-annual program report; January
2007 through December 2008.
USAID award: Management Sciences for Health;
Financial reporting time frame: quarterly financial status report;
January 2007 through December 2008;
Programmatic reporting time frame: quarterly performance report;
January 2007 through December 2008.
CDC award: Columbia University (ART);
Financial reporting time frame: annual financial status report; January
2007 through December 2008;
Programmatic reporting time frame: Semi-annual program report; January
2007 through December 2008;
Interim progress report due dates[A]: December 2007; December 2008.
CDC award: Zambia Ministry of Health;
Financial reporting time frame: annual FSR report; January 2007 through
December 2008;
Programmatic reporting time frame: Semi-annual program report; January
2007 through December 2008;
Interim progress report due dates[A]: December 2007; December 2008.
OGAC reporting:
Semi-annual report; January 2007 through December 2008.
Sources: GAO analysis of USAID and CDC data.
[A] Interim progress reports also serve as CDC partners' applications
for funding for the coming year.
[End of figure]
According to PEPFAR guidance on preparing the COP for fiscal years 2008
and 2009, COP reporting is essential for demonstrating program results
and fiscal accountability; moreover, according to OGAC officials, the
public reporting of obligations data is important for enhancing
transparency.[Footnote 75] Likewise, CDC and USAID officials in
Namibia, South Africa, and Zambia told us that their primary sources of
information on implementing partner performance are award-specific
programmatic and financial reports. CDC and USAID officials in Namibia
and South Africa told us they also use OGAC reporting to engage
implementing partners and monitor performance. However, because OGAC
and award-specific reporting time frames are not synchronized, CDC and
USAID must request and validate additional information, including
financial data, from their implementing partners. In addition, to
report financial obligations to OGAC, CDC and USAID told us that they
must also use award obligations data from agency-specific systems and
judgmentally enter this data by program area and country (for
multicountry awards).
The time required to meet other agency-or mission-specific reporting
requirements may further limit U.S. agency officials' ability to
conduct site visits. For example, under the leadership of the U.S.
Ambassador, each operating unit (e.g., USAID mission or CDC country
team) delivering U.S. foreign assistance is required to compile an
annual operational plan, performance plan, and performance report.
Although only State and USAID officials currently report operational
plan information using State's reporting systems, State originally
expected the systems eventually to include data from the more than 25
other U.S. agencies involved in foreign assistance. In addition, State
requires all U.S. overseas posts, regardless of whether they deliver
U.S. foreign assistance funding, to submit a 3-year mission strategic
plan. State is also developing 5-year country-specific strategies (a
pilot project is currently underway) that aim to bring together all
U.S. agencies' foreign assistance activities in a country, regardless
of funding source.[Footnote 76]
According to the OGAC task force report, PEPFAR officials spend a
significant amount of time on reporting, which reduces officials' time
for oversight of PEPFAR activities and assurance of program quality.
Likewise, during our visits to South Africa, Namibia, and Zambia in
December 2008, CDC and USAID officials in these countries told us that
the time spent collecting data and submitting country-level reports,
including those required by OGAC, reduces available time for oversight
activities,[Footnote 77] including visits to implementing partner
sites.[Footnote 78] To address agency officials' limited ability to
visit PEPFAR implementing partners, in South Africa, CDC and USAID
recently worked together to make an acquisition award to a South Africa-
based organization to conduct performance assessments and conduct site
visits.
Implementing Partners and Subpartners Did Not Consistently Carry Out
Established Financial Management Control Activities:
Although the majority of implementing partners and subpartners we
reviewed have designed internal controls to provide assurance that
PEPFAR funds are used for intended purposes, we found that one partner
and some subpartners were not operating according to these established
controls, thereby limiting their ability to account for the use of
PEPFAR funds. Our previous work has shown that the design and
implementation of appropriate internal controls is a key factor in
agencies' ability to efficiently and effectively achieve their missions
and program results.[Footnote 79]
The results of our limited reviews of internal controls at 18
implementing partner and subpartner sites[Footnote 80] indicate that 14
sites had internal controls that, if implemented, may provide adequate
assurance that PEPFAR funds are used for intended purposes; the other 4
subpartner sites had fundamental deficiencies in their internal control
design. For example, at one of the subpartners, we identified a lack of
proper segregation of accounting duties and, at another, we found such
poor records maintenance that we were unable to determine the validity
of the subpartner's use of PEPFAR funds it had received.
In our limited tests of internal controls implementation at 15 partner
and subpartner sites,[Footnote 81] we found 1 partner and 6 subpartners
that did not always follow their own internal control polices and
procedures. For example, although one partner in South Africa had
established internal control procedures, our test of expenditures found
that the majority of this partner's PEPFAR funds were paid to
subpartners without validation to determine whether the funds were used
appropriately or as intended. The partner's financial manager provided
us with what he characterized as a typical example of a paid subpartner
invoice for our examination. This invoice, totaling about $130,000,
lacked supporting documentation that was sufficient for us to determine
the validity of the transaction. For instance, one line item on the
invoice indicated a charge of more than $18,000 for security, with no
further explanation or supporting documentation. In response to our
concerns about the lack of adequate support, the financial manager told
us that this organization's program officials review random invoices
during their subpartner site visits. However, we later interviewed a
program official at this organization who told us that invoice reviews
were not a part of programmatic site visits. Furthermore, in September
2007, the partner's chief operating officer presented the
organization's board of directors the results of an ongoing assessment
identifying the risk of fraudulent exploitation of PEPFAR funds by
subcontractors and the need to mitigate this risk by verifying
financial records against clinical records during site visits. Of the 6
subpartners that we determined did not always implement their own
internal control policies and procedures, 5 had used PEPFAR funds to
pay invoices without sufficient supporting documentation--such as
purchase orders, purchase requisitions, receiving reports, and itemized
receipts--that would have allowed us to determine the validity of the
transaction. In some cases, the entire invoice package was missing.
[Footnote 82] At the remaining subpartner site, we found that cash
disbursements made without required recipient signatures.
Moreover, CDC auditors reported on two cases of CDC partners with
internal controls weaknesses in the PEPFAR focus countries. In 2007 and
2008, CDC auditors, in response to implementing partner staff
allegations and CDC program officials' requests, conducted financial
reviews of two implementing partners with CDC cooperative agreements in
two PEPFAR countries.[Footnote 83] The auditors reported that these
partners had instances of weak internal controls, such as unreconciled
bank accounts and inadequate support for transactions or expenditures.
In one case, the auditors found that the implementing partner had
charged more than $37,000 in unallowable costs to the CDC award, and
they recommended that CDC initiate a process for
reimbursement.[Footnote 84]
CDC Procedures for Collecting Audit Information and Resolving Issues
Are Not Clear:
CDC does not have clear procedures for collecting required audit
information or ensuring that audit findings are resolved, limiting CDC
oversight officials' ability to effectively monitor partners'
activities. In accordance with OMB requirements,[Footnote 85] HHS
agencies require implementing partners[Footnote 86]--including U.S.-
and non-U.S.-based organizations and foreign governmental agencies,
such as ministries of health--to submit annual audits if they expended
more than $500,000 in federal funding in a given fiscal year after
December 31, 2003. According to HHS policy, CDC assistance and
acquisition and program officials are responsible for ensuring
implementing partners submit audits and resolve any findings. [Footnote
87] One CDC official in Atlanta began collecting and reviewing audits
for 105 non-U.S.-based CDC implementing partners over the audit
threshold in the fall of 2008. In addition, in South Africa, a CDC
assistance and acquisition official[Footnote 88] told us in December
2008 that audits for approximately 50 CDC implementing partners in
South Africa were being collected. However, in December 2008, this
official told us that only two audits had been submitted and that other
partners' audits likely had not been conducted.
According to a CDC official, a large percentage of the audits collected
to date contain significant internal control weaknesses. According to
CDC, the HHS Inspector General, National External Audit Review Center
recently agreed to review all international partners' audit reports.
CDC assistance and acquisition officials in Atlanta and South Africa
told us that they answer implementing partners' questions about audit
requirements and the resolution of any findings. The CDC official in
Atlanta also told us that CDC in-country oversight officials may become
involved in ensuring that partners respond to audit findings and that
these officials are notified about the resolution of audit findings.
However, we found that audit information was not routinely shared and
that CDC has not yet developed clear guidance--such as when to impose
special award conditions[Footnote 89]--for ensuring that audit findings
are resolved. For example, a CDC partner in Namibia received an audit
in 2005 that identified several weaknesses, including inaccurate
reporting of subpartner expenses, late submission of financial status
reports, and inadequate segregation of duties. Although the
implementing partner had drafted a letter to CDC giving reasons for
these weaknesses--citing, for example, insufficient staff--as of
December 2008 the partner had not yet developed a strategy for
implementing the audit recommendations. Without established procedures
for sharing implementing partners' audit information and resolving
issues, oversight officials have limited ability to implement
accountability practices necessary to strengthen any identified
weaknesses and effectively monitor implementing partners' activities.
Conclusions:
During the first 5 years of PEPFAR, HHS and USAID generally engaged in
accepted practices for making assistance and acquisition awards--the
PEPFAR program's primary tool for achieving its goals--as well as in
oversight practices to ensure that PEPFAR funds are used as intended.
Assistance and acquisition award practices included planning for
partner selection through assessment of program needs; using
competition to select among candidates for PEPFAR awards; and
evaluating candidates' technical, management, and financial capacities
before making awards. Oversight practices included, for example,
reviewing partners' programmatic reports and financial data and
providing technical assistance to partners.
However, gaps in PEPFAR guidance on partner selection could limit
OGAC's ability to use this process to meet program needs. Specifically,
the guidance does not call for agency assistance and acquisition
officials' involvement in PEPFAR planning for partner selection and has
not been integrated with relevant agency guidance. Moreover, challenges
related to CDC's and USAID's oversight of the awards limit the
agencies' ability to provide accountability for the use of PEPFAR
funds. These challenges include staffing shortages; mismatched
reporting time frames; partners' financial management, or internal
control, weaknesses; and CDC's lack of procedures for collecting
partners' required audit information and ensuring that audit findings
are resolved. Given that PEPFAR operates in some of the world's poorest
and most high-risk environments, it is particularly important that
CDC's and USAID's oversight addresses any weaknesses in their partners'
and subpartner's implementation of financial controls.
Recommendations for Executive Action:
To strengthen CDC's and USAID's ability to accomplish PEPFAR goals and
ensure accountability for PEPFAR funds, we recommend that the Secretary
of State direct OGAC to take the following six actions:
* Improve the process of partner selection by:
- ensuring that the annual guidance on preparing the COPs addresses the
need to involve assistance and acquisition officials, and:
- working with HHS and USAID to clarify the relation between PEPFAR
guidance on COP preparation and the agencies' guidance on assistance
and acquisition awards.
* Strengthen oversight of PEPFAR implementing partners by:
- working with CDC and USAID to develop a strategy to address staffing
shortages identified by OGAC, CDC, and USAID;
- working with implementing agencies to develop a plan to reduce PEPFAR
country teams' reporting burden through better alignment of OGAC and
agency reporting time frames;
- assessing and addressing the degree to which weaknesses in PEPFAR
partners' and subpartners' implementation of financial controls
negatively affect CDC's and USAID's ability to ensure that program
funds are used for their intended purposes; and:
- working with CDC to establish procedures for collecting PEPFAR
implementing partners' audit information and addressing audit findings.
Agency Comments and Our Evaluation:
Responding jointly with HHS and USAID, State provided written comments
on a draft of this report (see appendix IV for a copy of these
comments). In addition, State's OGAC, in coordination with HHS and
USAID, provided technical comments, which we incorporated as
appropriate.
In their written comments, the agencies generally acknowledged our
recommendations regarding PEPFAR partner selection and oversight,
noting several areas where they have begun to address our
recommendations. For example, the agencies noted that the COP guidance
for fiscal year 2010 directs the interagency teams to consult with
assistance and acquisition officials during COP development and
throughout implementation of their assistance and acquisition plans.
The agencies also stated that the fiscal year 2010 COP guidance directs
the teams to develop an action-oriented staffing plan that identifies
all existing vacant positions and that outlines a specific plan for
filling them in a timely manner. In addition, the agencies stated that
the interagency Procurement and Assistance Working Group has reviewed
the fiscal year 2010 COP guidance to ensure alignment with assistance
and acquisition principles. The agencies did not comment on our
recommendation regarding working with implementing agencies to develop
a plan to reduce PEPFAR country teams' reporting burden by better
alignment of OGAC and agency reporting time frames.
In their written and technical comments, the agencies emphasized that
the strategic planning function was served by the country-level 5-year
strategy during the first phase of PEPFAR, and they observed that OGAC
does not intend the COP to serve as a strategic planning document or a
procurement plan. However, regarding planning for procurement, CDC
officials told us that they use the COP as a strategic plan for PEPFAR
partner selection.
We are sending copies of this report to the Secretary of State and the
Global AIDS Coordinator. In addition, the report will be available at
no charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-3149 or gootnickd@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major contributions
to this report are listed in appendix V.
Signed by:
David Gootnick:
Director, International Affairs and Trade:
List of Committees:
The Honorable Patrick Leahy:
Chair:
The Honorable Judd Gregg:
Ranking Member:
Subcommittee on State, Foreign Operations, and Related Programs:
Committee on Appropriations:
United States Senate:
The Honorable John Kerry:
Chair:
The Honorable Richard Lugar:
Ranking Member:
Committee on Foreign Relations:
United States Senate:
The Honorable Nita Lowey:
Chair:
The Honorable Kay Granger:
Ranking Member:
Subcommittee on State, Foreign Operations, and Related Programs:
Committee on Appropriations:
House of Representatives:
The Honorable Howard Berman:
Chair:
The Honorable Ileana Ros-Lehtinen:
Ranking Member:
Committee on Foreign Affairs:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To identify criteria for award selection and oversight, we reviewed
internal agency guidance from the Department of Health and Human
Services (HHS) and the U.S. Agency for International Development
(USAID), as well as recent GAO reports on procurement processes,
conducted interviews with assistance and acquisition officials at HHS
and USAID, and held discussions with a GAO acquisitions and sourcing
management expert. We also analyzed Office of the U.S. Global AIDS
Coordinator (OGAC) guidance to President's Emergency Plan for AIDS
Relief (PEPFAR) country teams for completing the country operational
plans (COP) for fiscal years 2008 and 2009. In addition, we reviewed
discussions of the interagency PEPFAR Procurement and Assistance
Working Group and the report of the 2007 PEPFAR Contracting Officers
Conference held in South Africa.
To analyze agency practices for competitive selection of implementing
partners, we requested data on all awards that received funding in
fiscal year 2008 from the Centers for Disease Control and Prevention
(CDC), USAID Washington, and the USAID missions in the three countries
we visited, a total of 444 awards.[Footnote 90] To ensure consistent,
complete, and accurate data entry by the agencies we developed a
standard data collection instrument. In developing it, we conducted
detailed discussions with agency officials on the applicability and
definitions of specific variables. There were some differences in
definitions across agencies and these were to tailor the instrument for
each of the agencies and missions. For each award, CDC and USAID
identified the award mechanism (assistance or acquisition award);
whether the award was competitively bid; whether the award end date had
been extended; and whether the award amount was increased over its
initial ceiling. In addition, the USAID missions in the three countries
we visited provided data on whether their awards were competed and
funded by the missions or through field support or leader with
associate awards.
We verified the data by comparing the data points to award files for
about 5 percent of the awards. To verify these data, we took the
following steps:
(1) interviewed officials at each agency on their methodology for
collecting and entering the data we requested and checking for
accuracy, completeness, and consistency in the data they provided;
(2) performed electronic data testing on the data provided; and:
(3) compared the data points provided with award files for about 5
percent of the awards.
Our verification efforts identified several limitations in the data
that the agencies provided us. Despite these limitations, we determined
that the data were sufficiently reliable for our intended analysis of
key overall levels of the use of award mechanisms, data extensions,
award amount increases, and competitive selection procedures.
For the CDC data on acquisition awards, we were unable to obtain
supporting documentation to manually verify the obligations data. The
contracts data represent a small proportion of overall obligations at
CDC on PEPFAR; Global HIV/AIDS Initiative (GHAI)/PEPFAR obligations
from the beginning of PEPFAR through the end of fiscal 2008 totaled
about $18 million for contracts and about $2.5 billion for cooperative
agreements. For the data that CDC provided on cooperative agreements,
we identified inaccuracies in the variable on award increases for two
of the five awards we examined. (The other variables for the
cooperative agreements data did not contain inaccuracies.) However, our
other tests of data reliability, through interviews and electronic
testing, indicated that the agency had considered a number of factors
in compiling the data and had procedures in place to ensure general
reliability and accuracy. Our manual verification of the data provided
by USAID Washington and the USAID mission in South Africa identified
several inaccuracies in the South Africa mission data on award amount
increases; as a result, we omitted 10 awards from our analysis. We were
also unable to obtain supporting documentation to manually verify the
obligations data from USAID South Africa. In addition, our review of
data regarding competitive solicitation in fiscal year 2008 for one
award from USAID Washington found inaccuracies resulting from the
award's having been made prior to the initiation of the PEPFAR program.
Our examination of other USAID Washington and mission data found
reliable data collection, entry, and verification procedures. We
rounded the data on obligations, and we did not provide specific counts
of award increases and extensions.
To review both selection and oversight processes, we drew two
judgmental samples of HHS and USAID awards. To select the first sample,
we obtained lists of all CDC, HRSA, and USAID awards receiving PEPFAR
funding in fiscal year 2007 from the agencies.[Footnote 91] We
categorized these awards by agency and funding mechanism. Because USAID
makes awards at its headquarters in Washington as well as out of the
field missions, we considered awards from the field as a separate
category, resulting in six agency categories: CDC, HRSA, USAID
headquarters, and the USAID missions in Namibia, South Africa, and
Zambia. We then categorized the lists of awards we received by whether
they were acquisition awards (contracts) or assistance (grants or
cooperative agreements). For USAID missions, we also distinguished
between awards competed and funded by the missions and field support
and leader with associate awards. We had a total of 405 awards in this
universe. We selected the largest award from each category on the basis
of total award amount.[Footnote 92] Our sample included 15 awards: 2
from CDC, 1 from HRSA, 2 from USAID headquarters, 4 from the USAID
mission in South Africa, and 3 each from the USAID missions in Namibia
and Zambia.
To select the second sample, we identified major awards for
antiretroviral (ARV) drug procurement in each of the three countries we
visited by identifying partners who procured ARV drugs in fiscal year
2007. We calculated each partner's share of funding for ARV drugs
within each country and selected awards made to the partners with the
largest share of funding for ARV drugs. Where there was no one clear
partner with the largest amount of funding, we selected the partners
with the largest amounts. We identified one partner for Namibia, one
for Zambia, and three for South Africa. In addition, we selected two
additional awards in Zambia, to ensure that we reviewed both CDC and
USAID oversight practices, and one additional award in South Africa, to
ensure that we reviewed a major treatment partner for USAID in South
Africa. Two awards were common to both samples, leading to a total of
21 distinct awards across both samples.
We then reviewed selection and oversight processes for the first sample
of 15 awards by analyzing agency documentation of award selection for
each award, including documentation of the solicitation, evaluation,
agency decision, and the award agreement. To ensure consistent,
complete, and accurate analysis of these files, we developed a standard
data collection instrument. In developing it we conducted two rounds of
testing in which we selected two of our awards and entered the data
into the draft instrument, noting any ambiguities in the definitions of
specific variables. This effort resulted in numerous improvements to
the instrument. The analysis involved two reviewers' coding each set of
documents independently and then reaching consensus on their responses
where they disagreed. Because it was outside the scope of our defined
objectives, we did not assess or evaluate the scores that agencies gave
the applications.
We reviewed oversight practices for both samples of awards by
conducting interviews with award and program officials responsible for
these awards, as well as with the partners and, in some instances,
subpartners implementing the awards. We did not find any major
differences in oversight of awards in our second sample, for ARV drug
procurement, compared to the first sample, and so we reported on
oversight for both samples together.
To understand how oversight of awards takes place, we conducted site
visits to three countries: Namibia, South Africa, and Zambia. We
selected countries based on their method of ARV drug procurement and
the size of the PEPFAR program. We identified several categories of ARV
drug procurement based on the procurer of ARV drugs in fiscal year
2007: the Partnership for Supply Chain Management through the Supply
Chain Management Systems contract (exclusively or almost exclusively),
large U.S.-based partners, local nongovernmental organizations (NGO),
and ministries of health. ARV drugs were largely procured by the
Ministry of Health in Namibia, by large U.S.-based partners and local
NGOs in South Africa, and by the Partnership for Supply Chain
Management in Zambia. In addition, we selected small, medium, and large
PEPFAR programs. The three countries we selected represent 26.4 percent
of budget allocations for PEPFAR focus countries for fiscal years 2006-
2008.[Footnote 93]
We conducted a limited review of CDC and USAID implementing partners'
design and implementation of internal controls. We conducted these
limited internal control assessments in Washington, D.C., and during
our fieldwork in Namibia, South Africa, and Zambia.[Footnote 94] By
design, we mean whether an organization has defined the components of
its internal control framework to include such basic control activities
as written accounting policies and procedures and codes of conduct. By
implementation, we mean whether an agency follows through on its
established or designed controls.
To assess whether implementing partners and subpartners had designed
internal controls, we interviewed CDC and USAID implementing partner
and subpartner officials to obtain an understanding of their internal
control framework. We used a standardized matrix work plan to determine
whether these organizations had basic internal control tools, such as
written accounting policies and procedures and a systematic way of
tracking various sources of funding. Our site reviews were limited in
scope and were not sufficient for expressing an opinion on the
effectiveness of implementing partners and subpartners internal
controls or compliance.
Similarly, to test the partners' and subpartners' implementation of
their established internal controls, we conducted a limited review of
transactions. The tests included the review of invoices, vendor lists,
and general ledger details. We classified an expenditure as
insufficiently supported if the expenditure was not supported by
sufficient documentation to enable an objective third party to
determine that it was a valid use of grant funds or if the expenditure
was specifically prohibited by laws and regulations. Given the
aforementioned constraints, we were not able to conduct transaction
testing at all sites nor were we able to determine the degree to which
these type issues may be systemic throughout the PEPFAR program.
[End of section]
Appendix II: Partners and Subpartners Selected for Review of Oversight
Practices:
As noted in appendix I, we judgmentally selected 21 Department of
Health and Human Services (HHS) and U.S. Agency for International
Development (USAID) awards receiving PEPFAR funding in fiscal year 2007
for our review of CDC and USAID oversight practices.
With data provided by Office of the U.S. Global AIDS Coordinator
(OGAC), Health Resources and Services Administration (HRSA), Centers
for Disease Control and Prevention (CDC), and USAID officials, we
further identified these partners' subpartners, where applicable. To
fully understand CDC and USAID oversight practices for these awards, we
conducted reviews of some of these partners' and subpartners' financial
management and internal controls practices in Namibia, South Africa,
and Zambia.[Footnote 95] We conducted these assessments during our
field work in December 2008.
Table 1: PEPFAR Implementing Partners and Subpartners Selected for
Review of Oversight Practices:
Implementing partner: South Africa: Partnership for Supply Chain
Management[A];
Agency: USAID;
Subpartners: John Snow International[A].
Implementing partner: South Africa: Management Sciences for Health[F];
Agency: USAID;
Subpartners: [Empty].
Implementing partner: South Africa: Family Health International[F, G];
Agency: USAID;
Subpartners: Johannesburg Hospital.
Implementing partner: South Africa: University Research Company;
Agency: USAID;
Subpartners: [Empty].
Implementing partner: South Africa: Pact[F];
Agency: USAID;
Subpartners: Absolute Return for Kids; Children In Distress Network[F].
Implementing partner: South Africa: Reproductive Health and HIV
Research Unit[F, G];
Agency: USAID;
Subpartners: [Empty].
Implementing partner: South Africa: South African Catholic Bishops
Conference[B, F, G];
Agency: CDC;
Subpartners: Hope for Life Clinic[G]; Sisters of Mercy Clinic[G]; St.
Francis Clinic[G]; St. Mary's Clinic.
Implementing partner: South Africa: Aurum Health Institute[F, G];
Agency: CDC;
Subpartners: MES[G]; Reaction[G].
Implementing partner: South Africa: Catholic Relief Services[F];
Agency: HRSA/CDC;
Subpartners: South Africa Catholic Bishops Conference[B, F, G];
Institute for Youth Development South Africa[F].
Implementing partner: South Africa: Columbia University International
Center for AIDS Care and Treatment Programs[F];
Agency: CDC;
Subpartners: [Empty].
Implementing partner: Namibia: Academy for Educational Development;
Agency: USAID;
Subpartners: [Empty].
Implementing partner: Namibia: IntraHealth, Inc.;
Agency: USAID;
Subpartners: [Empty].
Implementing partner: Namibia: Namibia Ministry of Health;
Agency: CDC;
Subpartners: [Empty].
Implementing partner: Namibia: Pact[F, G];
Agency: USAID;
Subpartners: [Empty].
Implementing partner: Zambia: Research Triangle Institute;
Agency: USAID;
Subpartners: Family Health International[C, F]; Zambia Health Education
and Communications Trust[F, G].
Implementing partner: Zambia: Family Health International[D, F, G];
Agency: USAID;
Subpartners: [Empty].
Implementing partner: Zambia: Program for Appropriate Technology in
Health[F, G];
Agency: USAID;
Subpartners: [Empty].
Implementing partner: Zambia: Partnership for Supply Chain
Management[A];
Agency: USAID;
Subpartners: John Snow International[A, F, G].
Implementing partner: Zambia: Zambia Ministry of Health;
Agency: CDC;
Subpartners: [Empty].
Implementing partner: Zambia: Columbia University, University Technical
Assistance Program;
Agency: CDC;
Subpartners: University Teaching Hospital[F, G].
Implementing partner: Other[E]: Elizabeth Glaser Pediatric AIDS
Foundation[F];
Agency: USAID;
Subpartners: [Empty].
Source: GAO synthesis of data provided by OGAC, CDC, HRSA, and USAID,
and interviews with officials at CDC, HRSA, and USAID.
[A] The Partnership for Supply Chain Management and its subpartner John
Snow International operate in multiple PEPFAR countries, including
South Africa and Zambia, under a USAID acquisition award.
[B] South Africa Catholic Bishops Conference is a CDC prime
implementing partner and a subpartner under HRSA's cooperative
agreement with Catholic Relief Services.
[C] Columbia University International Center for AIDS Care and
Treatment Programs operates in multiple PEPFAR countries, including
South Africa, under a CDC cooperative agreement.
[D] Family Health International is a prime USAID Zambia implementing
partner and a subpartner under USAID Zambia's acquisition award with
Research Triangle Institute.
[E] These implementing partners did not have activities in the three
countries we visited at the time of our review.
[F] These 18 PEPFAR implementing partners and subpartners, covering 15
of the 21 awards in our sample, were included in our limited reviews of
partners' internal controls design. One of these subpartners is also a
prime implementing partner under a separate PEPFAR award.
[G] These 15 implementing partners and subpartners, covering 11 of the
21 awards in our sample, were included in our limited reviews of
partners' internal controls implementation. One of these subpartners is
also a prime implementing partner under a separate PEPFAR award.
[End of table]
[End of section]
Appendix III HHS and USAID Guidance on Assistance and Acquisition
Strategies:
HHS Awarding Agency Grants Administration Manual 2.04.104A:
* Advance planning is essential to ensure that awarding offices:
- adequately consider the design of financial assistance programs and;
- allocate staff and other resources to make timely and high-quality
awards;
* The annual procurement planning process should ensure:
- adequate consideration of the appropriate award instrument (contract,
cooperative agreement, or grant) and;
- appropriate time frames for completing financial assistance
activities.
USAID Automated Directives System 201.3.11.11:
* Assistance objective teams must develop a comprehensive acquisition
and assistance plan for their assistance objective;
* Plans should describe plans for competition or for waivers of
competition;
* Plans should also discuss expected completion dates for all
implementing instruments;
* The implementation plan should:
- identify the obligating instruments that will be used and;
- outline a timeline for completion of procurement processes.
Source: GAO analysis of HHS Awarding Agency Grants Administration
Manual and USAID Automated Directives System.
[End of table]
[End of section]
Appendix IV: Comments from the U.S. Department of State, Office of the
Global AIDS Coordinator:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
United States Department of State:
Washington, D.C. 20520:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "President's
Emergency Plan For Aids Relief: Partner Selection and Oversight Follow
Accepted Practices but Would Benefit from Enhanced Planning and
Accountability," GAO Job Code 320583.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Rebecca Hooper, Director of Management and Budget, Office of the U.S.
Global AIDS Coordinator at (202) 663-2339.
Sincerely,
Signed by:
James L. Millette:
cc:
GAO Audrey Solis:
S/GAC - Michele Moloney-Kitts:
State/OIG - Mark Duda:
[End of letter]
Department of State, Department of Health and Human Services, and U.S.
Agency for International Development Comments on GAO draft report:
President's Emergency Plan For Aids Relief: Procurement and Oversight
Follow Accepted Practices but Would Benefit from Steps to Enhance
Planning and Accountability (GAO-09-666, GAO Code 320583):
On behalf of the President's Emergency Plan for AIDS Relief (PEPFAR),
the U.S. Departments of State (DOS) and Health and Human Services
(HHS), and the U.S. Agency for International Development (USAID), I
would like to express our appreciation for the opportunity to comment
on the draft report from the Government Accountability Office (GAO)
titled, "President's Emergency Plan for AIDS Relief: Procurement and
Oversight Follow Accepted Practices but Would Benefit from Steps to
Enhance Planning and Accountability" (GAO-09-666).
We welcome the report's conclusion that the current partner selection
and oversight processes of PEPFAR implementing agencies follow accepted
best practices. Yet as the Institute of Medicine has noted, PEPFAR is a
learning organization, and in that spirit we welcome the report's
identification of areas in which PEPFAR partner selection and oversight
could be strengthened. As PEPFAR enters its sixth year of operations,
we agree that there are still lessons to learn and significant
variation in how well recipients are able to implement and oversee
PEPFAR funding. The report is timely, and we will take its
recommendations into consideration during the development of the Five-
Year PEPFAR strategy for fiscal years (FYs) 2009-2013.
We are particularly pleased to note that prior to the release of this
final report, PEPFAR's own reviews of processes and guidance have
addressed many of GAO's recommendations. PEPFAR has already worked to
develop deeper linkages and opportunities for engagement between
procurement and program staff. For example, during the FY 2009
Headquarters Operational Plan process, partner performance reviews
involved procurement and program staff in a common task. In addition,
we have improved the FY 2010 Country Operational Plan (COP) guidance by
directing country teams that they must consult with acquisition and
assistance officials in the process of developing their COP and
throughout implementation of their acquisition and assistance plans.
Further, the interagency Procurement and Assistance Working Group
(PAWG) has reviewed the FY 2010 COP guidance to ensure alignment with
acquisition and assistance principles.
PEPFAR is committed to continue working through the PAWG and agency
leadership to ensure alignment between the PEPFAR guidance and
implementing agency guidance and regulations. The FY 2010 COP guidance
also asks that country teams develop an action-oriented staffing plan
that identifies all existing vacant positions and outlines a specific
plan for filling them in a timely manner. [See comment1]
In addition to the actions described above, HHS is taking a number of
steps to strengthen PEPFAR partner's implementation of financial
controls by exploring options to provide additional training to field
staff as well as implementing partners on proper project and financial
oversight. The HHS Office of the Inspector General (OIG) also has
agreed to process audits of foreign recipients, which will greatly
strengthen our auditing capacity. The OIG has a system for tracking the
receipt of audits and the resolution of audit findings by HHS's Centers
for Disease Control and Prevention (CDC) and a process for identifying
and following up on delinquent audits. CDC has followed those
procedures for domestic audits and is now planning to utilize them for
international audits.
USAID intends to recommend that USAID country teams hire a technical
assistance contractor, if necessary, to oversee and monitor internal
control rules and regulations that comply with GAO Standards for
Internal Control in the Federal Government, GAO/AIMD-00-21.3.1
(Washington, D.C.: Nov. 1999).
The report outlines concerns about the procurement planning process in
relation to the development of the annual COP and the timing of
reporting. It is important to define clearly the purpose and function
of the COP development process and database. Essentially, the COP
development process is a comprehensive and rigorous assessment used to
develop an annual plan based on strategies and approaches developed
locally as well as programmatic guidance and technical considerations
from headquarters. The Country Operational Planning and Reporting
System (COPRS) database inventories detailed information about planned
activities and results in a given country or region. Under the new
Partnership Framework approach, the COP will describe annual U.S.
government plans to operationalize PEPFAR's support for the partnership
goals. Such a system is essential to link resource allocation to
results and demonstrates program impact and fiscal accountability. The
COP also serves as an important tool to communicate program advances
from a technical and policy standpoint.
However, the COP is not a strategic planning document. The strategic
planning function was served by the country-level Five-Year Strategy
during the first phase of PEPFAR, and will be served by the Partnership
Framework in the next phase. Further, the COP is not a procurement
plan. Once PEPFAR senior leadership approve the annual planned
activities via the COP, the country teams plan procurement and
assistance actions to implement the COP based on the competitive rules
and regulations of each implementing agency. PEPFAR relies on the
interagency planning processes to coordinate the HIV/AIDS investment
strategy by technical program area and allocate resources to the
agencies within the country team that can support those technical
allocations. At that point, the procurement or assistance awards become
the responsibility of the agency receiving the allocation of funding
per the grant and contracting operating procedures of that agency.
Further, oversight is the responsibility of the agency that made the
award. [See comment 1]
The report highlights concern about the volume of approved staff
positions that are currently vacant. We are working with our field
staff and agency management offices to address issues affecting the
recruitment and retention of staff dedicated to working on PEPFAR
around the world.
In closing, we would like to again express our appreciation for GAO's
examination of these important issues and the recommendations. We look
forward to continuing to work to strengthen PEPFAR processes to ensure
harmonized and accountable programs.
The following is our response to the joint written comments from the
Department of State, the Department of Health and Human Services'
Centers for Disease Control and Prevention (CDC), and the U.S. Agency
for International Development.
GAO Comments:
1. Responding to language in our draft report, the agencies note that
they do not consider the country operational plan (COP) a strategic
planning document, stressing that the strategic planning function was
served by the country-level 5-year strategy during the first phase of
the President's Emergency Plan for AIDS Relief (PEPFAR) and will be
served by the partnership framework in the next phase. In addition, the
agencies state that they do not consider the COP a procurement plan.
However, as our report notes, CDC officials told us that they use the
COPs as their strategic plan for PEPFAR partner selection. In response
to OGAC's concerns about our characterizing the COP as a strategic
planning document, we clarified some of the language of our findings--
for example, describing the intended purpose of the COP development
process.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
David Gootnick, (202) 512-3149 or gootnickd@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Audrey Solis (Assistant
Director), Todd M. Anderson, Sunny Chang, Bonnie Derby, Pamela
Davidson, David Dornisch, Etana Finkler, Lisa M. Galván-Treviño, Reid
Lowe, Grace Lui, Kim McGatlin, Diahanna Post, Susan Ragland, Sylvia
Schatz, John Sellers, William Woods, and Tom Zingale made key
contributions to this report. Additional technical assistance was
provided by Kathryn Bernet, Miriam Carroll, Chhandasi Pandya, Julia
Roberts, Meredith Trauner, and Heather Whitehead.
[End of section]
Related GAO Products:
Global HIV/AIDS: A More Country-Based Approach Could Improve Allocation
of PEPFAR Funding. [hyperlink, http://www.gao.gov/products/GAO-08-480].
Washington, D.C.: April 2008.
Global Health: Global Fund to Fight AIDS, TB and Malaria Has Improved
Its Documentation of Funding Decisions but Needs Standardized Oversight
Expectations and Assessments. [hyperlink,
http://www.gao.gov/products/GAO-07-627]. Washington, D.C.: May 2007.
Global Health: Spending Requirement Presents Challenges for Allocating
Prevention Funding under the President's Emergency Plan for AIDS
Relief. [hyperlink, http://www.gao.gov/products/GAO-06-395].
Washington, D.C.: April 2006.
Global Health: The Global Fund to Fight AIDS, TB and Malaria Is
Responding to Challenges but Needs Better Information and Documentation
for Performance-Based Funding. [hyperlink,
http://www.gao.gov/products/GAO-05-639]. Washington, D.C.: June 2005.
Global Health: U.S. AIDS Coordinator Addressing Some Key Challenges to
Expanding Treatment, but Others Remain. [hyperlink,
http://www.gao.gov/products/GAO-04-784]. Washington, D.C.: June 2004.
Global Health: Global Fund to Fight AIDS, TB, and Malaria Has Advanced
in Key Areas, but Difficult Challenges Remain. [hyperlink,
http://www.gao.gov/products/GAO-03-601]. Washington, D.C.: May 2003.
[End of section]
Footnotes:
[1] Approximately two-thirds of funding appropriated for PEPFAR's first
5-year phase was directed to HIV/AIDS initiatives in 15 countries,
known as focus countries: Botswana, Côte d'Ivoire, Ethiopia, Guyana,
Haiti, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa,
Tanzania, Uganda, Vietnam, and Zambia. In the 2003 authorizing
legislation (Pub. L. No. 108-25), Congress assigned an HIV/AIDS
Response Coordinator (later titled Global AIDS Coordinator) the duty of
directly approving all activities of the United States related to
combating HIV/AIDS in 14 of these countries. Vietnam was selected as
the 15th country in 2004 and was added to the list of designated
countries in 2008 by the legislation reauthorizing PEPFAR--the Tom
Lantos and Henry J. Hyde United States Global Leadership against HIV/
AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008, Pub. L.
No. 110-29, § 102, 122 Stat. 2918, 2935.
[2] The key HHS agencies implementing PEPFAR are the Centers for
Disease Control and Prevention (CDC) and the Health Resources and
Services Administration (HRSA). Other federal departments and agencies-
-the Department of State, Department of Defense, Peace Corps,
Department of Labor, and Department of Commerce--carry out limited
PEPFAR-funded activities.
[3] USAID maintains overseas missions in 13 of the 15 PEPFAR focus
countries. CDC provides clinicians, epidemiologists, and other medical
experts who generally work directly with foreign governments, health
institutions, and other entities. HRSA's global HIV/AIDS program
promotes clinical system strengthening and human resources for health
but does not have an overseas presence.
[4] In this report, assistance awards refers to grants and cooperative
agreements and acquisition awards refers to procurement contracts. The
Federal Grant and Cooperative Agreement Act of 1977, codified at 31
U.S.C. §§ 6304-6305, states when an executive agency shall use these
instruments. Under sections 6304 and 6305, assistance awards are used
to transfer a thing of value to a recipient to accomplish a public
purpose authorized in federal law. Agencies are to use cooperative
agreements when they anticipate substantial involvement in implementing
the award and are to use grants when substantial involvement is not
expected. Under section 6303, procurement contracts shall be used when
the principal purpose of the relationship between the federal
government and the recipient is for the procurement of goods or
services for the direct use or benefit of the U.S. government or the
agency decides in a specific instance that the use of a procurement
contract is appropriate.
[5] COPs are used to plan activities and funding for implementing
partners.
[6] Pub .L. No. 110-161, § 668(d), 121 Stat. 1844, 2353 (2007); Pub. L.
No. 110-293, § 101(d), 122 Stat. 2918, 2931. The acts directed us to
look at PEPFAR procurement, among other things. In addition to
reviewing procurement contracts, we also looked at assistance awards
because of the significant extent to which these instruments are used
to carry out the PEPFAR mission.
[7] The 15 awards we reviewed included 1 assistance award from HRSA; 1
assistance award and 1 acquisition award from CDC; and 8 assistance
awards and 4 acquisition awards from USAID headquarters and the three
missions.
[8] CDC conducted the selection process for this award and then
transferred the award to HRSA.
[9] We did not evaluate applicants' proposals or the agencies' award
decisions.
[10] Previous GAO work defines internal control as an integral
component of an organization's management that provides reasonable
assurance that the following objectives are being achieved:
effectiveness and efficiency of operations, reliability of financial
reporting, and compliance with applicable laws and regulations. See
GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00021.3.1]
(Washington, D.C.: Nov. 1999).
[11] For acquisition awards, agencies are required to follow the
procedures laid out in the Federal Acquisition Regulation (FAR). For
assistance awards, CDC and USAID must adhere to statutes governing the
use of assistance awards such as the Federal Grant and Cooperative
Agreements Act of 1977, as codified at 31 U.S.C. §§ 6301 et seq., as
well as legislation governing the operation of the agencies (e.g.,
title 42 of the United States Code for HHS agencies, and the Foreign
Assistance Act of 1961, as amended, for USAID). HHS regulations for
assistance awards are laid out in various parts of title 45 of the Code
of Federal Regulations including Parts 74 and 92, as well as in the HHS
Grants Policy Directives and Awarding Agency Grants Administration
Manual. USAID regulations for assistance awards are laid out in various
parts of title 22 of the Code of Federal Regulations, including Parts
216, 226, and 228, and the agency's Automated Directives System (ADS).
[12] For acquisition awards, 10 U.S.C. § 2304 and 41 U.S.C. § 253
require, with certain limited exceptions (see FAR Subparts 6.2 and
6.3), that contracting officers must promote competition in soliciting
offers and awarding government contracts. FAR 6.101(a).
[13] In the area of acquisition awards, the FAR contains detailed
requirements concerning source selection procedures, including a focus
on offeror capabilities. In a best value source selection, the award
decision is based on evaluation factors and significant subfactors that
are tailored to the acquisition. FAR 15.304(a). These factors may
include technical and management capacity. FAR 15.204-5. The firm's
financial capacity will also be reviewed as part of the responsibility
determination. FAR 9.104-3.
[14] According to OGAC, for PEPFAR's second 5-year phase, no
distinction exists between focus countries and other countries
receiving bilateral assistance through PEPFAR.
[15] Funding for U.S. government programs to fight HIV/AIDS in the 15
PEPFAR focus countries is appropriated under the Department of State's
Global HIV/AIDS Initiative (GHAI) and Global Health and Child Survival
State (GHCS-State) accounts as well as CDC's Global AIDS Program (GAP)
and several other accounts.
[16] In addition to CDC and HRSA, a number of other HHS agencies
participate in PEPFAR activities.
[17] These funds were allocated from the Global Health and Child
Survival State fund (formerly the GHAI account).
[18] The legislation reauthorizing PEPFAR requires the formulation of a
comprehensive 5-year strategy for fiscal years 2010 through 2014, to be
presented to Congress no later than October 1, 2009.
[19] There is not a one-to-one correspondence between the funding
mechanisms and agency awards, because each funding mechanism is
specific to a country, whereas some awards may be applicable to
multiple countries.
[20] In some cases, if the agency has not identified specific
implementing partners, they insert "TBD" (i.e., to be determined) in
the annual plan.
[21] Assistance and acquisition officials are known at CDC as
procurement officers or grants management officers and are known at
USAID as contracting officers.
[22] Program officials are known at CDC as project officers and are
known at USAID as contracting officer technical representatives.
According to HHS policy, the responsible program office (e.g., CDC
Global AIDS Program) appoints a program official for each award.
According to USAID policy, assistance and acquisition officers
designate a program official for each award and, in so doing, define
the scope of the program official's authority to administer the award.
[23] Domestic Working Group, Grant Accountability Project, Guide to
Opportunities for Improving Grant Accountability (Washington, D.C.:
U.S. Environmental Protection Agency, 2005). Available at [hyperlink,
www.epa.gov/oig/dwg/reports].
[24] Although most PEPFAR funding is channeled through the implementing
agencies, OGAC has directly funded a number of programs, including the
New Partners Initiative (NPI). With funds provided by OGAC, all NPI
awards have been awarded and managed by the headquarters of
implementing agencies. The NPI program was designed to increase the
number of local organizations, including faith-and community-based
organizations, that are direct PEPFAR grantees and to enhance the
technical and organizational capacity of local partners. According to
an OGAC report, PEPFAR implementing agencies worked with 2,217 local
organizations in fiscal year 2007, or 87 percent of all implementing
partners. The report states that this was an increase over fiscal year
2004, in which PEPFAR worked with 1,588 local organizations. The report
also states that such outreach to local implementing partners is key
for developing host country capacity.
[25] For acquisition awards, agencies are required to follow the
procedures laid out in the FAR. For assistance awards, CDC and USAID
must adhere to statutes governing the use of assistance and acquisition
awards such as the Federal Grant and Cooperative Agreements Act of
1977, as codified at 31 U.S.C. §§ 6301 et seq., as well as legislation
governing the operation of the agencies (e.g., title 42 of the United
States Code for HHS agencies, and the Foreign Assistance Act of 1961,
as amended, for USAID). HHS regulations for assistance awards are laid
out in various parts of title 45 of the Code of Federal Regulations
including Parts 74 and 92, as well as the HHS Grants Policy Directive
and Awarding Agency Grants Administration Manual. USAID regulations for
assistance awards are laid out in various parts of title 22 of the Code
of Federal Regulations (CFR) including Parts 226, 228 and 216 and the
ADS.
[26] Many of the FAR requirements are based on statutory requirements.
[27] GAO, Framework for Assessing the Acquisition Function at Federal
Agencies, [hyperlink, http://www.gao.gov/products/GAO-05-218G]
(Washington, D.C.: Sept. 2005).
[28] Domestic Working Group, Guide to Opportunities for Improving Grant
Accountability.
[29] The 15 program areas in the COP for fiscal year 2008 are:
prevention of mother-to-child transmission; abstinence and be faithful
programs; medical transmission/blood safety; medical transmission/
injection safety; condoms and other prevention activities; palliative
care/basic health care and support; palliative care/tuberculosis/HIV;
orphans and vulnerable children; counseling and testing; HIV/AIDS
treatment/antiretroviral (ARV) drugs; HIV/AIDS treatment/ARV services;
laboratory infrastructure; strategic information; policy analysis and
system strengthening; and management and staffing.
[30] [hyperlink, http://www.gao.gov/products/GAO-05-218G].
[31] PEPFAR Contracting Officer Conference Report, Pretoria, South
Africa, October 30-November 2, 2007.
[32] According to an HHS assistance and acquisition official, no formal
policy was issued to terminate CDC participation in the joint
solicitation process.
[33] Domestic Working Group, Guide to Opportunities for Improving Grant
Accountability.
[34] FAR Part 6. Many of the FAR requirements are based on statutory
requirements. While CDC and USAID are subject to FAR requirements, they
also have agency-specific regulations concerning competition when using
contracts at 48 CFR part 306 and 48 CFR part 706, respectively. While
the Federal Grant and Cooperative Agreements Act of 1977 encourages
competition for grants and cooperative agreements, CDC and USAID have
agency-specific regulations stating that transactions shall be
conducted in a manner to provide, to the maximum extent practical, open
and free competition. CDC's regulations on competition are in the HHS
Grants Policy Statement and USAID's regulations are in ADS 303.3.6. We
did not assess adherence to FAR, regulatory, or statutory requirements.
[35] We reviewed 10 assistance awards and 5 acquisition awards. For the
one HRSA assistance award in our review, CDC conducted the selection
process and then transferred the award to HRSA. Although CDC and USAID
use different competitive selection procedures for assistance awards on
the one hand and acquisition awards on the other, both agencies
generally seek to ensure competitive selection.
[36] The review panels do not make binding decisions about which
applicant should be offered an award. We found one case in which a CDC
award was made to an organization outside the nonbinding funding order
recommended by the review panel. In this case, which involved proposals
for antiretroviral (ARV) treatment, OGAC overrode the findings of the
review panel, citing the global AIDS coordinator's preference for the
proposal's plan to rapidly expand ARV treatment. We also found one case
in which a USAID award was made in response to an unsolicited proposal
rather than through a competitive process. This award was made under a
USAID waiver issued in 2001 to authorize, among other things, the use
of less than fully competitive procedures for new grants and
cooperative agreements for HIV/AIDS and other infectious disease
initiatives. This waiver expired in 2007 and was replaced by a second
waiver that is effective through 2013.
[37] Acquisition awards made using fully competitive procedures were
awarded under full and open competition--that is, all responsible
sources were permitted to compete. (See FAR 2.101.)
[38] According to a CDC assistance and acquisition official,
solicitations for fully competitive cooperative agreements contain
standard language including a wide-ranging list of organizations that
may apply.
[39] FAR 6.302-1 allows contracting without providing for full and open
competition, where there is only one responsible source and no other
supplies or services will satisfy the agency requirements. Furthermore,
for acquisition awards, CDC has waiver authority under 48 CFR subpart
306.3. CDC also allows for limited competition upon justification for
assistance awards. See U.S. Department of Health and Human Services,
Office of the Assistant Secretary for Resources and Technology, Office
of Grants, HHS Grants Policy Statement (Washington, D.C., 2007), pp. 24-
26.
[40] An additional nine awards from the missions were excluded from the
analysis of competition, because they were either task orders or
associate awards and therefore, by definition, were not made using
fully competitive procedures.
[41] USAID generally had justifications for waiving competition on the
remaining assistance awards. Furthermore, for acquisition awards, USAID
has waiver authority under 48 C.F.R. subpart 701.4 USAID also does not
require competition for certain categories of assistance awards when a
justification has been prepared based on specified exceptions. See ADS
303.3.6.5.
[42] USAID ADS 303.3.26 defines a leader award as an award that covers
a specified worldwide activity. The leader award includes language that
allows a mission or other office to award a separate grant to the
leader award recipient without additional competition and in support of
a distinct local or regional activity that fits within the terms and
scope of the leader award; this is called an associate award.
[43] Central awards and field support can be assistance or acquisition
awards. Leader with associate awards are assistance awards.
[44] Some USAID missions do not have in-house assistance and
acquisition officials but instead rely on regional offices where
assistance and acquisition officials assist several missions. USAID
Namibia works with assistance and acquisition officials in the Regional
Office for Southern Africa.
[45] Before initiating a contract modification, the contracting officer
must determine if the proposed effort is within the scope of the
existing contract or is a new acquisition outside of the scope. A new
requirement outside of the scope of the existing contract must be
processed as a new acquisition. We did not assess whether the
modifications were within the scope of the original contracts. Various
requirements apply to extensions of acquisition and assistance awards,
and there are various exceptions to these requirements. We did not
review or evaluate the appropriateness of any of these extensions.
[46] FAR 17.207 (f) states, in part, that before exercising an option,
the contracting officer must make a written determination for the
contract file that exercise is in accordance with the terms of the
option, the requirements of section FAR 17.207, and Part 6. To satisfy
requirements of Part 6 regarding full and open competition, the option
must have been evaluated as part of the initial competition and be
exercisable at an amount specified in, or reasonably determinable from,
the terms of the basic contract.
[47] In April 2008, senior officials at the PEPFAR implementing
agencies extended some awards made in the first year of the PEPFAR
program to fund treatment, prevention, and care. OGAC officials told us
that this was intended to provide additional time for transition and
ensure continuity of care and services. The end dates for four awards
for ARV treatment, managed by CDC and HRSA and originally made in 2004,
were extended from 2009 to 2012, for a total award length of 8 years.
Awards made by USAID Washington and other agencies were extended by a
lesser amount of 4 to 16 months. Various requirements apply to
extensions of acquisition and assistance awards, and there are various
exceptions to these requirements. We did not review or evaluate the
appropriateness of any of these extensions.
[48] Domestic Working Group, Guide to Opportunities for Improving Grant
Accountability.
[49] See FAR Part 15. Many of the FAR requirements are based on
statutory requirements. We did not assess adherence to FAR or statutory
requirements.
[50] Although our sample comprised 15 awards, it included only 14 award
solicitations because one of the proposals was unsolicited. All 5
acquisition awards in our sample were made under a solicitation.
[51] Seven of these solicitations were for assistance awards and three
were for acquisition awards.
[52] Six of these solicitations were for assistance for awards and two
were for acquisition awards.
[53] Seven of these proposals were for assistance awards and three were
for acquisition awards.
[54] Five of these proposals were for assistance awards and one was for
an acquisition award.
[55] See USAID ADS 303.3.9. USAID guidance requires that assistance and
acquisition officials determine whether applicants have the capacity to
carry out specified program activities; this evaluation may include a
preaward financial audit. For organizations that previously have been
USAID implementing partners, assistance and acquisition officials may
review annual independent audits or the partners' past performance. For
organizations new to USAID, assistance and acquisition officials may
review partners' annual audits, internal policies and procedures, or
conduct a preaward audit.
[56] These 10 awards comprised 7 assistance awards and 3 acquisition
awards.
[57] The remaining two awards comprised one assistance award and one
acquisition award.
[58] HHS guidance states that assistance and acquisition officials may
conduct or arrange for preaward surveys of applicants' management
systems when necessary (see Awarding Agency Grants Administration
Manual, chapter 1.04.104). The CDC and USAID assistance and acquisition
officials conference report from 2007 recommended conducting preaward
audits but also noted that these audits are not always feasible because
of compressed timeframes for making awards.
[59] To assess CDC, HRSA, and USAID oversight of PEPFAR implementing
partners, we analyzed 21 awards that received PEPFAR funds in fiscal
year 2007. These awards included the 15 HRSA, CDC, and USAID awards for
which we reviewed award documentation; 5 additional awards from CDC;
and 1 additional award from USAID South Africa. See appendix I for more
information regarding our methodology.
[60] Although one of the awards we reviewed was from HRSA, CDC staff in
the field are responsible for day-to-day oversight of this award
because HRSA does not operate overseas.
[61] OGAC COP guidance for 2008 and 2009 states that country teams
should review partner programmatic and financial performance (i.e.,
pipeline analysis) to ensure the best use of resources and that partner
spending is in accordance with work plans.
[62] To effectively oversee awards, U.S. agencies should track the
financial status of awards, monitor performance, use implementing
partner audit information, and monitor subpartner activities. See
Domestic Working Group, Guide to Opportunities for Improving Grant
Accountability.
[63] CDC officials told us the "substantial involvement" clause of
cooperative agreements with implementing partners allows agency
officials to provide input on programmatic and management of PEPFAR-
funded projects.
[64] In 2005 PEPFAR launched the New Partners Initiative (NPI), which
has aimed to increase the number of local organizations, including
faith-and community-based organizations, receiving direct PEPFAR
support. To date, PEPFAR agencies have made awards to 56 NPI
implementing partners, many of which were previously PEPFAR
subpartners.
[65] In 2008, the Center for Global Development analyzed fiscal year
2005 PEPFAR funding data and found that, on average, 30 percent of all
PEPFAR funds was obligated to local implementing partners, with large
variation among PEPFAR focus countries. In addition, the center found
that, of the 19 percent of funding channeled through implementing
partners to their subpartners, local organizations received 55 percent.
See Center for Global Development, The Numbers Behind the Stories:
PEPFAR Funding for Fiscal Years 2004 to 2006 (Washington, D.C., 2008).
[66] We analyzed full-time equivalent (FTE) data collected by OGAC for
the 15 focus countries as of November 2008, including filled and
unfilled FTEs for CDC and USAID position categories with direct award
oversight responsibilities: contracting officers, financial/budget,
management/leadership, public affairs/public diplomacy, technical
advisors/nonmanagement, technical advisors/program managers/public
health advisor, and technical leadership/management. Filled and vacant
FTEs for legal advisors were not provided and thus are not included in
our analysis.
[67] According to OGAC, direct-hire positions are U.S. government
positions authorized for filling by federal employees appointed under
U.S. government personnel employment authority. A civilian direct-hire
position generally requires the controlling agency to allocate an FTE
resource.
[68] According to OGAC, these positions include individuals hired under
personal services contracts and personal services agreements, as well
as individuals engaged through another contracting mechanism by a non-
U.S. government organization that does not establish an employer/
employee relationship with the U.S. government. Individuals hired under
personal services contracts are hired through U.S. government
contracting authority that generally establishes an employer/employee
relationship. Individuals hired under personal services agreements are
hired through specialized State contracting authority that establishes
an employer/employee relationship.
[69] In addition, a December 2007 report by the USAID Office of
Inspector General found that NPI had increased mission workload, in
part because USAID staff were devoting significant amounts of time and
resources to assist partners, such as by familiarizing partners with
administrative requirements and providing technical guidance. See USAID
Office of Inspector General, Audit of USAID's New Partners Initiative
Created Under the President's Emergency Plan for AIDS Relief, Report
No. 9-000-08-002-P (Washington, D.C., 2007).
[70] In 2008, we reported that USAID lacked the capacity to develop and
implement a strategic Acquisition and Assistance workforce plan because
it lacked reliable data on overseas Acquisition and Assistance staffing
levels and information on the competencies of these officials. See GAO,
USAID Acquisition and Assistance: Actions Needed to Develop and
Implement a Strategic Workforce Plan, GAO-08-1059 (Washington, D.C.:
September 2008).
[71] PEPFAR Contracting Officer Conference Report, October 30-November
2, 2007, Pretoria, South Africa.
[72] According to a 2006 USAID Inspector General audit, USAID mission
interpretation of OGAC guidance on reporting time frames varied by
mission because OGAC guidance was not clear. The auditors also reported
that the availability of reliable data from one reporting period to the
next allows for the comparability of reporting results over time. Data
comparisons across time can quickly alert emergency plan managers and
other stakeholders of changes in performance, programmatic gaps to be
filled, and whether targets are being met. Similarly, data comparisons
across missions can lead to refined strategic planning and can be an
important tool for policy development. See USAID, Audit of USAID's
Progress in Implementing the President's Emergency Plan for AIDS
Relief, Report No. 9-000-07-004-P (Washington, D.C., December 22,
2006).
[73] In its response to a USAID Office of Inspector General 2006 audit,
USAID commented that the flow of funds to agencies, countries and
implementing partners is dependent on the date Congress approves annual
appropriations for PEPFAR. These dates vary by year, thus affecting the
date USAID awards are made. See USAID, Audit of USAID's Progress in
Implementing the President's Emergency Plan for AIDS Relief, Report No.
9-000-07-004-P (Washington, D.C., December 22, 2006).
[74] Office of the Global AIDS Coordinator, Reporting Burden Task Force
(Washington, D.C., November 2005).
[75] OGAC reports partner-level obligations data on the PEPFAR Web
site. See [hyperlink, www.pepfar.gov/partners].
[76] See GAO, Foreign Aid Reform: Comprehensive Strategy, Interagency
Coordination, and Operational Improvements Would Bolster Current
Efforts, [hyperlink, http://www.gao.gov/products/GAO-09-192]
(Washington, D.C.: Apr. 17, 2009).
[77] A June 2008 report by the USAID Office of Inspector General also
found that performance monitoring and data quality assessment was
limited because of staffing shortages and competing priorities at USAID
missions. USAID Office of Inspector General, Audit of USAID's
Implementation of the President's Emergency Plan for AIDS Relief, Audit
Report No. 9-000-08-008-P (Washington, D.C., 2008).
[78] COP guidance for 2008 and 2009 states that information from
interagency on-site partner reviews should, whenever possible, augment
information that agencies use to review partners' performance.
[79] Internal control comprises the plans, methods, and procedures used
to meet missions, goals, and objectives and, in doing so, supports
performance-based management. Internal control also serves as the first
line of defense in safeguarding assets and preventing and detecting
errors and fraud. See GAO, Standards for Internal Control in the
Federal Government, [hyperlink,
http://www.gao.gov/products/GAO/AIMD-00-21.3.1] (Washington, D.C.: Nov.
1999).
[80] We conducted limited reviews of the design of internal controls at
18 PEPFAR implementing partner and subpartner sites, covering 15 of the
21 awards in our sample. One of these subpartners is also a prime
implementing partner under a separate PEPFAR award. For a list of
partners and subpartners included in this assessment, see appendix II.
[81] We conducted assessments of implementation of internal controls
activities at 15 PEPFAR partner and subpartner sites, covering 11 of
the 21 awards in our sample. One of these subpartners is also a prime
implementing partner under a separate PEPFAR award. For a list of
partners and subpartners included in this assessment, see appendix II.
[82] Our work was not designed to identify all instances of fraud,
waste, or abuse of PEPFAR funds; therefore we cannot determine the
extent of any fraudulent, wasteful, or abusive transactions. Rather,
the examples described above serve to illustrate the effect of internal
control weaknesses on CDC, USAID, and implementing partners' ability to
oversee PEPFAR-funded activities.
[83] These countries were not among the three that we visited in
December 2008.
[84] In addition, a December 2007 USAID Inspector General audit of NPI
partners found that although the initial 19 NPI partners did not, as a
group, demonstrate that they had the capacity to comply with selected
USAID administrative requirements, there were indications that the
partners were making improvements to comply with some of those
requirements. The auditors called for follow-up reviews of NPI
partners' preaward audits, to ensure that the partners correct
deficiencies and account for PEPFAR funds. The auditors also reported
that partners needed additional guidance on written procedures for
allowable costs. In addition, the auditors found that NPI partners did
not maintain adequate support documentation for expenditures and that
partners required additional guidance. See Audit of USAID's New
Partners Initiative Created Under the President's Emergency Plan for
AIDS Relief, Report No. 9-000-08-002-P2007 (Washington, D.C., December
12, 2007).
[85] This requirement is based on OMB Circular A-133.
[86] 45 CFR 74.26(d) specifies HHS audit requirements. In its award
agreements, CDC includes language addressing implementing partner audit
requirements.
[87] Previous GAO work has shown that award managers should ensure (1)
that those responsible for award oversight have the financial
information necessary to make an informed decision as to whether the
partner may require more oversight or assistance in achieving its award
objectives and (2) an adequate means of communicating back and forth
with partners exists to assist them with meeting the goals and
objectives of their awards. Ultimately, better program oversight can
help to assure that resources are responsibly and effectively utilized
and partners are in compliance with applicable laws and regulations.
See [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1].
[88] In 2008, as part of a pilot program, CDC placed assistance and
acquisition officials in South Africa. These officials are responsible
for assisting with oversight of CDC awards in South Africa, including
collection of implementing partners' annual audits and financial
reviews.
[89] To address audit findings, HHS policy permits CDC officials to
place special award conditions in a partner's award agreement and
designate the partner as high risk, for example.
[90] For CDC, we excluded acquisition awards that were for obtaining
office supplies and for hiring personnel.
[91] We identified awards that received funding from the GHAI account.
The 15 focus countries received most of their funding from this
account.
[92] Awards were not made in all categories at the missions.
[93] According to OGAC, Namibia, South Africa, and Zambia represent 38
percent of the people who received treatment, 30 percent of the orphans
and vulnerable children who received services and care, and 22 percent
of the pregnant women who received counseling and testing services in
the 15 focus countries during fiscal years 2006-2008.
[94] We were not able to assess design and implementation of internal
controls at every partner and subpartner site because of logistical
constraints such as limited time spent at the sites, lack of access to
financial records, and unavailability of key staff.
[95] In each country we visited, we selected at least one partner and
at least one of its subpartners for our review of financial management
and internal controls practices.
[End of section]
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